Why Big Tech Stays on Top: How Constant Updates and User Data Keep Digital Platforms in the Lead
Overview: In the paper titled, “Hypercontinuous Innovation and Demand-Side Learning: Why Digital Platforms Enjoy Longer and More Expansive Market Leadership Positions,” NYU Stern Professor Melissa Schilling and Joost Rietveld (University College London) explore why Big Tech companies’ digital platforms enjoy sustained and expanded positions of market leadership.
Why study this now: Big Tech companies like Google, Amazon, Meta, and others are stronger than ever. This research helps explain why that is, what it would take to challenge them, and what rules might be needed to make things more competitive.
What the authors found: In today's digital world, companies that make online products or services (like apps or streaming platforms) can become extremely powerful and hard to compete with. This happens because of three main reasons:
- Constant Updates Without You Noticing: Digital products can be updated instantly through the Internet. This means you’re always using the latest version without even thinking about it. You’re less likely to switch to a different product because you never really pause to consider alternatives.
- Learning From Your Data: These companies collect tons of information about what users like and do. They use that data to make their products even better and more personalized, which keeps users coming back.
- Personalization That Keeps You Hooked: Many digital services let you customize your experience—like making playlists or teaching the system your preferences. This makes switching to a competitor annoying, because you’d lose all the stuff that’s personalized just for you.
What does this change: Past studies talked about how some products get popular and stay that way, but this research shows that digital products are even harder to beat. This kind of power can lead to monopolies, where one company controls most of the market, making it harder for new companies to compete. This is especially important for business leaders trying to succeed in tech, and for government regulators trying to keep markets fair.
Key insight: “These shifts also do not act in isolation,” said the researchers. “There are powerful feedback mechanisms that help to further entrench and expand the dominance of these firms and their platforms.”
This research was published in Academy of Management Perspectives.