The Business of Platforms

A trio of experts on high-tech business strategy and innovation reveal the principles that have made platform businesses the most valuable firms in the world and the first trillion-dollar companies.

Managers and entrepreneurs in the digital era must learn to live in two worlds—the conventional economy and the platform economy. Platforms that operate for business purposes usually exist at the level of an industry or ecosystem, bringing together individuals and organizations so they can innovate and interact in ways not otherwise possible. Platforms create economic value far beyond what we see in conventional companies.

The Business of Platforms is an invaluable, in-depth look at platform strategy and digital innovation. Cusumano, Gawer, and Yoffie address how a small number of companies have come to exert extraordinary influence over every dimension of our personal, professional, and political lives. They explain how these new entities differ from the powerful corporations of the past. They also question whether there are limits to the market dominance and expansion of these digital juggernauts. Finally, they discuss the role governments should play in rethinking data privacy laws, antitrust, and other regulations that could reign in abuses from these powerful businesses.

Their goal is to help managers and entrepreneurs build platform businesses that can stand the test of time and win their share of battles with both digital and conventional competitors. As experts who have studied and worked with these firms for some thirty years, this book is the most authoritative and timely investigation yet of the powerful economic and technological forces that make platform businesses, from Amazon and Apple to Microsoft, Facebook, and Google—all dominant players in shaping the global economy, the future of work, and the political world we now face.

“"The authors authoritatively document the rules and pitfalls of platforms, combining years of research with practical guidelines and real-life examples. A must-read for all operators or participants of existing or future platform businesses." -- Stephane Kasriel, CEO of Upwork "Whether you are a customer wanting to understand the economic logic behind platforms, a business manager wanting to learn platform strategies, or a regulator wanting to become informed about platform governance, this book offers indepth, cogent, and up-to-date answers by three experts who began analyzing platforms when the word wasn't even known. A true treatise and treasure." -- Bengt Holmstrom, Paul A. Samuelson Professor of Economics and Management at MIT and winner of the 2016 Nobel Memorial Prize in Economic Sciences "Essential reading for any business trying to compete as a platform or against a platform. Even traditional businesses must understand how to evolve into a platform and partner with other platforms. Sound complicated? This book will help you sort it out." -- Arne Sorenson, CEO of Marriott International "Should every business jump on, surrender to, or be a platform? Should government condemn, regulate, or imitate platform businesses? This book not only answers these questions; it also provides critical understanding of the underpinning and superstructure of platforms. For every business and social leader, this is the go-to book for learning the essential lessons about the business phenomenon of our times." -- Reed Hundt, former chairman of the Federal Communications Commission and author of A Crisis Wasted: Barack Obama's Defining Decisions "The Business of Platforms should be read by all managers, entrepreneurs, investors, and academics interested in platform businesses. It is rigorous and valuable, yet very readable." -- Richard Schmalensee, former dean of the MIT Sloan School of Management and coauthor of Matchmakers: The New Economics of Multisided Platforms”

“The authors authoritatively document the rules and pitfalls of platforms, combining years of research with practical guidelines and real-life examples. A must-read for all operators or participants of existing or future platform businesses.” — Stephane Kasriel, CEO of Upwork“Whether you are a customer wanting to understand the economic logic behindplatforms, a business manager wanting to learn platform strategies, or a regulatorwanting to become informed about platform governance, this book offers indepth, cogent, and up-to-date answers by three experts who began analyzingplatforms when the word wasn’t even known. A true treatise and treasure.” — Bengt Holmstrom, Paul A. Samuelson Professor of Economics and Management at MIT and winner of the 2016 Nobel Memorial Prize in Economic Sciences“Essential reading for any business trying to compete as a platform or against a platform. Even traditional businesses must understand how to evolve into a platform and partner with other platforms. Sound complicated? This book will help you sort it out.” — Arne Sorenson, CEO of Marriott International“Should every business jump on, surrender to, or be a platform? Should government condemn, regulate, or imitate platform businesses? This book not only answers these questions; it also provides critical understanding of the underpinning and superstructure of platforms. For every business and social leader, this is the go-to book for learning the essential lessons about the business phenomenon of our times.” — Reed Hundt, former chairman of the Federal Communications Commission and author of A Crisis Wasted: Barack Obama’s Defining Decisions“The Business of Platforms should be read by all managers, entrepreneurs, investors, and academics interested in platform businesses. It is rigorous and valuable, yet very readable.” — Richard Schmalensee, former dean of the MIT Sloan School of Management and coauthor of Matchmakers: The New Economics of Multisided Platforms

Michael A. Cusumano is the Sloan Management Review Distinguished Professor of Management at the Massachusetts Institute of Technology's Sloan School of Management, with a joint appointment in the MIT Engineering Systems Division. He began studying the software business in 1985. He is co-author of a classic best-seller on the company, Microsoft Secrets as well Platform Leadership, The Business of Software, and Staying Power and Competing on Internet Time with Yoffie. His latest book, Staying Power: Six Enduring Principles for Managing Strategy & Innovation in an Uncertain World, was named one of the top business books of 2011 by Strategy + Business magazine. Professor David B. Yoffie is the Max and Doris Starr Professor of International Business Administration at Harvard Business School. He first met Andy Grove in 1987 and joined the Intel board of directors in 1989. He remains the longest-serving member of the Intel board. Yoffie has also written 40 Harvard Business School cases on Intel, Microsoft, and Apple, including the most widely used cases on these companies. He is the author of nine books, including the bestselling Competing on Internet Time with co-author Cusumano. He has also written extensively for the New York Times, the Wall Street Journal, and the Harvard Business Review. Annabelle Gawer is the highly-cited author of two books (Platform Leadership, and Platform, Markets and Innovation) and over a dozen articles in top international journals, Prof. Gawer's seminal research on platform leadership and innovation ecosystems explains how innovation and competition interact to shape platform-based markets and the digital economy. Annabelle's work has been featured in The New York Times, The London Times, The Financial Times, The Economist and The Wall Street Journal. A pioneer of international stature in the field of digital platforms, Annabelle is a leading voice in advancing research (Google Scholar indicates over 5430 citations as of February 2018), as well as managerial practice and European policy. Prof. Gawer advises the European Commission, the UK Parliament House of Lords, and the OECD on issues related to the future of ICT research directions in Europe and on the question of regulation of online platforms.

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