Platform Strategy: Lessons from UK Companies That Built Ecosystems
The Platform Shift
Platform business models — where a company creates value by facilitating interactions between two or more groups rather than selling products directly — have produced the world's most valuable companies. While the dominant platforms are American and Chinese, a growing number of UK companies are successfully executing platform strategies.
The appeal is clear. Platform businesses exhibit network effects — each additional user makes the platform more valuable for all other users — creating self-reinforcing growth cycles and formidable competitive moats. For UK companies competing against larger international rivals, platform strategies offer a path to defensible market positions that pure product strategies cannot match.
UK Platform Success Stories
Several UK companies have successfully executed platform strategies across diverse sectors. Rightmove and Zoopla dominate UK property by connecting buyers, sellers, agents, and mortgage providers. Deliveroo has built a three-sided platform connecting restaurants, delivery riders, and consumers. And Wise (formerly TransferWise) has constructed a global payments platform that serves both individuals and businesses.
In B2B markets, the platform model is equally powerful. Funding Circle created a lending platform connecting SME borrowers with investors. Octopus Energy's Kraken platform licenses its energy management technology to other utilities worldwide. And ARM Holdings, before its acquisition, built one of the most successful intellectual property licensing platforms in technology history.
What these companies share is a recognition that the value they create through facilitating connections exceeds the value they could capture through direct product sales. This insight — that orchestrating an ecosystem is more valuable than participating in one — is the foundation of platform strategy.
Building Network Effects
The critical challenge in platform strategy is achieving the initial liquidity that triggers network effects. Every platform faces a chicken-and-egg problem: users want a platform with many participants, but participants will not join until there are many users.
UK platform companies have used various strategies to solve this problem. Some begin by providing standalone value to one side of the platform before introducing the other side — Rightmove initially served as a property listings tool for agents before expanding to consumers. Others subsidise one side to attract the other — Deliveroo initially subsidised delivery fees to build restaurant participation.
The most defensible platforms achieve cross-side network effects (more sellers attract more buyers, which attracts more sellers) and same-side network effects (more users create more data, which improves the service for all users). Achieving both types creates a competitive moat that is extremely difficult for competitors to breach.
Risks and Challenges
Platform strategies carry significant risks. The investment required to achieve critical mass is substantial, and success is binary — platforms that fail to achieve liquidity often fail completely rather than settling into a modest market position.
Regulation is an increasing concern for UK platform businesses. The Competition and Markets Authority has stepped up scrutiny of platform market power, and the Digital Markets, Competition and Consumers Act 2024 gives regulators new powers to impose obligations on platforms designated as having strategic market status.
Multi-homing — where users participate in multiple competing platforms simultaneously — can undermine network effects. UK platforms must continuously invest in unique value propositions that discourage multi-homing and reward loyalty to a single ecosystem.
Strategic Implications
For UK companies evaluating platform opportunities, the key question is whether their market exhibits the characteristics that make platform models viable: fragmented supply, unmet demand for connection or matching, and the potential for network effects to improve the service as it scales.
Companies that identify genuine platform opportunities should be prepared for significant upfront investment, patient capital requirements, and the strategic discipline to prioritise growth and network effects over short-term profitability. The rewards for successful execution are substantial — but so are the risks of failure.