In a product business model, firms create value by developing differentiated products for specific customer needs, and they capture value by charging money for those items. In a platform business model, firms create value primarily by connecting users and third parties, and they capture value by charging fees for access to the platform. Platform models bring a shift in emphasis—from meeting specific customer needs to encouraging mass-market adoption in order to maximize the number of interactions, or from product-related sources of competitive advantage (such as product differentiation) to network-related sources of competitive advantage (the network effects of connecting many users and third parties)." – Harvard Business Review
For platform providers and app developers, customer-facing or user terms and conditions are important as these govern how a customer behaves and interacts with the platform provider on the platform and likewise with the developer on the app. This article is part of a series of articles we will be publishing as part of our Platform Economy Series. In this article we dig deeper into the issues discussed in our earlier article, specifically in respect of customer-facing terms and conditions and what you should consider in your interaction with customers.
Depending on the customer interface and the experience the platform provider would like the customer to enjoy, from a legal perspective this may necessitate:
- the platform provider requiring the customer to sign up to specific terms and conditions for accessing the platform; and
- the platform provider and/or the app developer requiring the customer to accept an additional set of terms and conditions in order to access a specific app. This would usually be negotiated between the platform provider and app developer as part of the overall onboarding of the app developer on to the platform, and often is a key issue especially when it comes to considerations like who "owns" the customer and specifically who is responsible for controlling the data generated from the customer's access. (In our next article we will provide more focus on the agreement between the platform provider and the app developer.)
The platform provider and/or app developer's engagement and interaction with the customer on the platform and the app must be in accordance with electronic communication and consumer laws and subject to appropriate terms and conditions. Some of the items that should be addressed as part of the customer facing terms and conditions include:
- services description,
- payment and delivery terms,
- acceptable use and content standards,
- customer registration rights and restrictions,
- IP ownership and rights, and
- data privacy considerations.
Our specialist team at ENSafrica have deep expertise in developing such terms and conditions for platform providers and app developers and have assisted a number of clients in drafting such terms and conditions. In light of our deep commercial expertise, we also ensure that such terms and conditions are drafted in a manner that is not only legally sound but which seeks to achieve maximum commercial advantage for our clients.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.