The dominant online platform companies are now the most valuable companies in the world, and their growing power over other organizations is enabling them to rewrite the rules of business strategy.
In the past decade, digital platforms have profoundly reorganized markets and industries and redefined the dynamics of value creation and competition. They have created marketplaces that have spawned an enormous number of platform-native startups. And as these have grown and prospered, existing businesses have felt compelled to join the platform economy, viewing participation as necessary for growth and even survival.
To date, most attention to platforms has focused on understanding their advantages over traditional industrial structures and how to replicate platform successes. However, the vast majority of companies will not own platforms but, rather, will increasingly depend and compete on them. To do so effectively, platform-dependent businesses must recognize the power dynamics and risks intrinsic to platform-controlled markets. And they must develop strategies that leverage a platform’s resources while mitigating its power over them.