Now that 2017 is approaching its end, it’s time to look at what the future holds for tech. If you are tech-savvy, you must have heard the term ‘API Economy’ in the last few years. APIs have been around for a while building value-driven API economy and it doesn’t look like they are going anywhere anytime soon.

Forbes believed 2017 was the year of APIs. Will 2018 see a rise in API-based strategic business development?  

Let’s look at what API stands for and why and how an API-led economy will change the digital world.

What exactly is API and why it Matters?

API is the acronym for application programming interface. These three letters are the driving factor behind most online experiences including search engines, social sharing and cloud platforms, and online purchases.

Application programming interfaces are a set of procedures and functions that connect different applications through a specific protocol. In simple words, API allows two applications to connect with each other to facilitate communication. Renowned applications like Facebook, Twitter and weather apps on your phone are regulated through API.

APIs act as a messenger between you and the server to make communication possible.

When you use an application in your mobile phone, the application sends the data to the server through internet connectivity. The server interprets that data to find relevant research and sends it back to the application. The application presents that data to you in an easy to understand format. This process is made possible through API.

What is API Economy and Why you need to Know about it

APIs enable different software components to communicate effectively to create a reliable channel for information sharing. Without API, you would not be able to use your favorite apps like Facebook or Instagram.

In other words, APIs are customizable software components that enable data sharing by overcoming the software incompatibilities. Additionally, APIs bring connectivity between different platforms regardless of the data structures and underlying technology. This makes them extremely powerful for organizations.

API economy is a term used to define the way APIs can significantly impact a company’s profitability through technology products that allow data sharing.

Why is API Economy the next big thing?

APIs offer a clear commercial benefit for companies in any industry. They not only help companies gain a substantial competitive edge but also give them the tools and data to create new businesses.

APIs work through algorithms that store user’s personal information which helps in analyzing user interaction and behavior. For example, your date of birth, your pattern of usage and personal preferences help companies improve their services and even help them invest in new businesses that seek to fulfill your needs better.

Uber API Case Study

Uber and Airbnb are the most prominent examples of companies who utilize APIs for business.

Let’s look at how Uber uses predictive API model to create a valuable service.

Uber’s predictive API model uses 3 main components that include:

  • Most searched destinations
  • The destination history of users
  • The behavior of each user

These components (along with many other aspects) enable Uber to predict specific user behavior that helps the company determine the destinations, estimated prices, geographical coordinates and much more through their digital tools.

API algorithms are utilized for anonymous data collection that equips Uber’s development team to learn more about consumers to create services that best fit their needs.

Without API this predictive model would never work.

Benefits of API Economy: For Businesses and Developers

Some of the benefits of the API-led economy include:

  • APIs give access to user data that assists in developing new products and services.
  • API development and integration require specialized domain expertise that you may not always have. So, you will have to connect with external experts. This process helps you learn and grow through the broader ecosystem.
  • APIs help you create new offerings and test markets for value generation. This aids in creating new value-driven opportunities for both consumers and service providers.

As a company, when you become a consumer of APIs, you do more than just contribute to the growing API ecosystem; you reduce distractions and build your focus around other operational activities that matter the most.

As a developer, you get to benefit from increased opportunities that take place as a result of the API driven ecosystem.


APIs are no longer a complex IT initiative that only fast-paced companies could afford; it has become a strategic approach towards a business that is more customer-centric, value-driven and automated.

The need to create unique business ideas depends highly on APIs, which will drive the economic value today and in the near future. IDC, a market intelligence agency, predicted it a year ago.

As more and more companies become tech-driven, APIs will become an important part of our work. Companies will strive to gain supremacy through unique connectivity that can only be achieved through APIs. As a result, developers will have more opportunities to help company’s define their API strategy for a better competitive edge.

APIs have become and will continue to grow as a fundamental component of a company’s strategic planning. For companies who want to stay relevant in the digital world, APIs will become the high priority task. So, it is safe to say that the API-led economy will bring a lot more for the tech industry and web developers in the coming year. 

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