MIT Sloan Management Review Article on The Future of Platforms

Platforms power the world’s most valuable companies, but it will get harder and harder to capture and monetize their disruptive potential.

The world’s most valuable public companies and its first trillion-dollar businesses are built on digital platforms that bring together two or more market actors and grow through network effects. The top-ranked companies by market capitalization are Apple, Microsoft, Alphabet (Google’s parent company), and Amazon. Facebook, Alibaba, and Tencent are not far behind. As of January 2020, these seven companies represented more than $6.3 trillion in market value, and all of them are platform businesses.

Platforms are also remarkably popular among entrepreneurs and investors in private ventures. When we examined a 2017 list of more than 200 unicorns (startups with valuations of $1 billion or more), we estimated that 60% to 70% were platform businesses. At the time, these included companies such as Ant Financial (an affiliate of Alibaba), Uber, Didi Chuxing, Xiaomi, and Airbnb.

About the Author

Michael A. Cusumano is the MIT Sloan Management Review distinguished professor of management at MIT Sloan School of Management, David B. Yoffie is the Max and Doris Starr Professor of International Business Administration at Harvard Business School, and Annabelle Gawer (@annabellegawer) is chaired professor of digital economy at Surrey Business School at the University of Surrey. This article is adapted from the authors’ book The Business of Platforms: Strategy in the Age of Digital Competition, Innovation, and Power (HarperCollins, 2019).

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