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Managing service failure on digital platforms: Strategies for dispute resolution

In the rapidly evolving landscape of digital and omnichannel services, platforms have emerged as powerful intermediaries connecting buyers and sellers. As these platforms facilitate more and more transactions and other types of user interactions, the need for effective dispute resolution mechanisms becomes paramount.


Aarni Tuomi

lehtori, majoitus- ja ravitsemisliiketoiminta
lecturer, hospitality business
Haaga-Helia ammattikorkeakoulu


Visiting Research Fellow
University of Surrey

Mário Passos Ascenção

principal lecturer
Haaga-Helia ammattikorkeakoulu

Published : 11.08.2023

As e-commerce grows, using the Internet to perform Alternative Dispute Resolution (ADR) or Online Dispute Resolution (ODR) will grow in numbers, range and scope. Lehdonvirta (2022) argues that the largest global digital platforms nowadays may resolve more disputes annually than all of the world’s public courts put together. According to Zeleznikow (2021, 789) “The one factor common to all descriptions of Online Dispute Resolution is the existence of a fourth party – namely the technology”.

In this two-part blog series, Haaga-Helia’s AlgoAmmatti-project team explores key features of dispute resolution on digital platforms and critically analyses how they differ from other types of services. Additionally, we will delve into the future of managing service failure in digital services and offer predictions on the evolving landscape.

Key features of dispute resolution on platforms

Digital platforms recognise the importance of maintaining trust and safety within their communities, and effective dispute resolution processes are instrumental in achieving this goal.

First and foremost, platforms typically establish community guidelines and terms of service, defining acceptable behaviour and prohibited actions. Users are encouraged to report or flag violations, which are then reviewed by the platform’s moderation team. Many platforms also encourage users to directly communicate with each other to resolve conflicts amicably. Mediation services may also be provided to facilitate discussions and help users find common ground.

Even though most reported issues are often handled by AI, digital platforms create work opportunities for many humans, and larger platforms often have dedicated teams responsible for handling user disputes. These teams evaluate cases, investigate allegations, and resolve the issues based on platforms’ policies. In some cases, platforms may also offer formal dispute resolution mechanisms such as arbitration or third-party mediation. Impartial individuals or organisations review the facts and make binding decisions to resolve the dispute.

Once a resolution has been reached, platforms may provide an appeal process for dissatisfied users to challenge initial decisions. This ensures fairness and allows for further review and resolution of disputes.

Changing landscape of service failure

Service failure in traditional e-commerce differs from that on platforms in several ways. In traditional e-commerce, sellers have full ownership and control over the customer experience, whereas platforms act as intermediaries. This distinction impacts the responsibility for resolving service failures. On platforms, the platform operator may play a more active role in dispute resolution, whereas in traditional e-commerce, it rests primarily with the seller.

Platforms also offer more diverse seller options, ranging from individuals to businesses. Consequently, platforms establish guidelines and standards, and they assume responsibility for addressing service failures within their ecosystem. In contrast, traditional e-commerce relies on individual seller policies and practices.

Moreover, many digital platforms employ review and rating systems, which enhance transparency and influence buyers’ decisions. Traditional e-commerce platforms may have less centralised review systems, rely on third-party review platforms, word-of-mouth (WOM) or eWOM.

Additionally, customer support differs significantly. Traditional e-commerce sellers handle customer support directly, whereas platforms often provide centralised customer support services, nowadays most notably through chat. This centralised approach streamlines dispute resolution and ensures consistent support across the platform.

The future of managing service failure in digital services

Looking ahead, the management of service failure in digital services is likely to undergo further advancements primarily due to advances in AI and blockchain.

In terms of AI-powered dispute resolution (aka AI-DR), AI can function in two ways: as a tool for the adjudicator or as the arbitrator or adjudicator itself. In the first approach, AI can help in reviewing content, data transaction, documents, researching similar cases, and drafting standard clauses. AI could also be used for classifying between high- and low-complexity cases, handing over the most demanding cases to human workers. This means that AI algorithms can analyse data, identify patterns, and provide efficient resolutions, enhancing the speed and accuracy of the process. However, the transparency and auditability become important to address different forms of bias and other issues related to the often black-boxed nature of algorithms.

Blockchain technology may offer another avenue for increasing transparency, as blockchain offers transparent and immutable records, reducing the potential for disputes and enhancing trust. Smart contracts and decentralised platforms built on blockchain may revolutionise dispute resolution by automating contractual enforcement. Collaborative resolution platforms might also emerge, facilitating the resolution of disputes through dialogue, negotiation, and consensus-building amongst users e.g. through voting the most ‘fair’ resolution. These platforms will prioritise preserving relationships and finding mutually agreeable solutions.

Digital platforms have revolutionised the e-commerce landscape, offering unique dispute resolution mechanisms to address service failures. By facilitating communication, establishing guidelines, and providing mediation, platforms enhance user trust and satisfaction. Managing the interaction and tensions between different user groups also brings new types of job opportunities and experience design challenges.

As technology evolves, we can anticipate further advancements in managing service failure, promoting a safer and more reliable digital marketplace. Increasingly important will also be the different governance structures platforms develop, design and deploy for managing user interaction. In the next part of this blog series, we will turn to discuss the emerging concept of deliberative platform governance through participatory design.


Lehdonvirta, V. 2022. Cloud Empires: How Digital Platforms Are Overtaking the State and How We Can Regain Control. MIT Press. Cambridge.

Zeleznikow, J. 2021. Using artificial intelligence to provide intelligent dispute resolution support. Group Decision and Negotiation, 30, 4, pp. 789-812.

Haaga-Helia’s AlgoAmmatti – Algorithmic Management and Professional Growth in Platform Economy -project seeks to understand algorithmic management practices and the impact of these on workers’ day-to-day experience in the context of digital labour platforms. The project is funded by the Finnish Work Environment Fund, and it is conducted between 03/2022-12/2023.

The project is conducted by Haaga-Helia’s Service Experience Laboratory LAB8.