Why Winner-Takes-All Thinking Doesn’t Apply to the Platform Economy

The problem is that network effects just aren’t as durable as they used to be...Currently, modern technology — fueled by software, the internet, and the cloud — makes it possible for a challenger to enter the market at minimal cost. Price competition doesn’t matter much since the winner that took al…

— David S. Evans, Richard Schmalensee, hbr.org

The Present Of Media Facebook Google Platforms Network Effects

Experience also shows us that that network effects can also work in reverse, and destroy value with explosive speed. This has happened to many shopping malls. When consumer traffic drops a little, a few stores leave, the mall becomes less attractive. Then traffic reduces a little more, more stores l…

— David S. Evans, Richard Schmalensee, hbr.org

The Present Of Media Facebook Google Platforms Network Effects

But the new economics of multisided platforms, which we explore in detail in Matchmakers, shows that the winner-takes-all theory doesn’t describe most internet platforms. What markets have these companies actually won? If you think Google is the winner in search, Facebook in social networks, and Twi…

— David S. Evans, Richard Schmalensee, hbr.org

The Present Of Media Facebook Google Platforms Network Effects

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