Contradictions of virtual competition as a result of algorithmization of management on digital platforms: institutional context

Abstract

The article analyzes the preconditions and mechanisms of management algorithmization on information (digital) platforms (IPs) and their contradictory impact on the transformation of competition in the tourism sector. The sources of competitive advantages of IPs formed as a result of digitalization are presented. The author reveals positive and negative consequences of the influence of platformization on the development of competitive relations for manufacturers and consumers. The negative ones include the monopolization of markets, the transition from the "invisible hand (Providence / market)" to the digital hand of IP and to computing devices that are devoid of subjectivity and from "data mining" to "reality mining", which influences consumer's thinking in order to control his behavior. The IPs assume the role of an intermediary-arbiter between potential competitors for the user's attention. The differences between IP as an innovative institutional form on the one hand, and hierarchical, network and market structures on the other are substantiated. The features of the algorithmic management model are revealed and the mechanisms of its functioning based on the use of rating and ranking tools are shown. It is based on the co-optation of ecosystem participants in the process of solving managerial tasks without delegating leadership powers to them. Managerial influence is replaced by regulation based on the algorithmic involvement of independent participants in the creation of new value. There is a transition from the "iron cage" of bureaucratic procedures to the "invisible cage" of quickly and easily changeable rules established by IP. The users’ ratings are recalculated into constantly renewable ranks, which serve to stimulate responses from producers and users. “Content supervision” by IP turns into a tool of IP’s “supervisory control” over producers. As a result, they, like consumers, become absolutely dependent on IP, which determines the order and carries out the ranking, and thereby predetermines success in the competitive struggle.