Today's tech giants are hardly the first corporations to achieve massive scale and entrench their dominance over key economic sectors. But unlike the monopolies of old, Big Tech has capitalized on the power of information itself to shut out potential competitors and manipulate consumer preferences and behavior.
CAMBRIDGE – We live in a world of giants. Alibaba, Alphabet, Amazon, Apple, Baidu, Facebook, IBM, Microsoft, Netflix, Tencent, and a few other tech behemoths have each found niches as digital service providers, acting as platforms and aggregators to secure scale, while deferring scope to individual vendors. Yet in confronting the sheer power of these firms, policymakers around the world have been focusing on size when they should be looking more precisely at how these firms are redefining our relationship with information.
In today’s economy, competition increasingly centers on influencing the value of information in the market. For firms, the primary objective is not just to create a widely appealing product, but also to anticipate and reshape consumer preferences through predictive analytics. Leveraging data in this way is now at the center of almost any firm’s approach to setting a business strategy or designing a product or service.
And yet the complexity of the modern economy has established a clear divide between firms that can derive value from information and those that cannot. And within the former camp, there is an emerging divide between firms that have the scale to leverage information-based advantages quickly, and those that do not. Under the new competitive model, the deciding factor is not just scale but also speed, sophistication, and control of the structures governing information in the digital economy.