A new paper by economist David Evans takes aim at the notion that Internet platforms are, in the words of some commentators, “unstoppable.” Evans differs from these implausible declarations, identifying several aspects of online platforms that lead to many a “sleepless night,” as cutting-edge platforms worry about disruption by existing rivals or new entrants. (DisCo has covered some of Evans’ scholarship before; he also co-authored the 2016 book Matchmakers on the subject.)
To start, what’s a “platform?” As I noted in a paper last year, few Internet terms are used with such imprecision as “platform.” In fact, as both Evans and other DisCo writers have observed, many traditional businesses have online presences that are indistinguishable from major online platforms. Evans uses the term “platform” specifically, in order to indicate a “businesses that connect two or more different types of users,” or what scholarly literature has called “multi-sided markets.”
Evans identifies several features of online platforms that result in leadership being less durable than other sectors, some of which will be familiar to regular DisCo readers. Platforms tend to be characterized by (1) rapid innovation in inter-firm competition; (2) disruptive innovation that moots the relevance of existing industries; and (3) the fact that users can “multi-home”, or use multiple competing services between which they can easily switch.