6 The business of RecSys: how platforms make money

Online platforms often make money in ways that depend on recommendations, even when the service itself appears free. In subscription services, recommender systems help keep people satisfied enough to renew. In commerce, they push users toward extra purchases, increase transaction volume, and help platforms take a cut from sales. In ad-supported services, they extend the time people spend on the platform and gather data that can later be sold to advertisers.

The chapter shows that recommender systems are not just tools for convenience; they are central to how platforms shape behavior and revenue. In e-commerce, they encourage upselling and can lower the burden of browsing huge inventories. In two-sided marketplaces, they do more than rank options: they help allocate rides, jobs, rentals, and other opportunities, effectively shaping markets and worker access. These systems can also create feedback loops that favor already popular items, sellers, or workers, making it harder for newcomers to compete.

A major concern is the surveillance-driven ad economy. Platforms collect detailed behavioral data through cookies, cross-site tracking, data brokers, location signals, and other forms of profiling, then use recommender systems to maximize engagement and ad targeting. Promoted content further blurs the line between organic ranking and paid visibility, reducing transparency and potentially distorting politics and markets. Overall, the chapter argues that platforms increasingly combine several profit models while recommender systems quietly enable both monetization and control, often at the expense of users, workers, and accountability.

• Recommender systems play a prominent role in generating revenue on platforms and transforming them into multi-billion-dollar businesses.
• When platforms charge a fee or subscription to access their services—common in on-demand streaming services—recommender systems are tasked to keep paying users interested with novel content so that they will renew their subscriptions.
• Recommender can suggest other items to buy, in e-commerce platforms—whose inventory is so vast that manual browsing would be impossible
• Recommender systems facilitate connecting goods and services and platforms take a cut of any transaction as is coming in ride-hailing, hotel-booking, or freelance worker marketplaces.
• The most pervasive business model of platforms is, however, the attention economy, in which platforms offer incentives to keep users online for as long as possible for two interconnected reasons: to display revenue-generating content and to profile users.
• Revenue-generating content typically comes in two formats: ads and promoted content. Ads are the most versatile—and the most scrutinized—format, in which someone pays the platform to reach a specific goal, such as visibility or installation of new apps. On the other hand, promoted content refers to existing content whose visibility has been artificially boosted. While more limited in format and scope, it also undergoes less scrutiny from outside parties, yet its effects should not be minimized.

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