October 6, 2026
In their latest Platform Chronicles article, Andrei Hagiu, Professor of Information Systems and his co-author Julian Wright argue that platform businesses offer the strongest overall combination of profitability, scalability, and defensibility.
They examine that claim against leading contenders: SaaS businesses like SAP, scale economies businesses like Costco, licensing businesses like ARM and Hilton, and learning-by-doing businesses like TSMC, Tesla and OpenAI.
The authors contend that successful platforms stand out because network effects can make their services increasingly valuable as more participants join, creating self-reinforcing advantages that are difficult for competitors to replicate. However, platforms also face significant challenges, including the difficulty of attracting multiple groups of users, the costs of building network effects, and the fact that growth does not always translate into profitability. Hagiu and Wright also emphasize that many successful businesses combine platform dynamics with other business models, rather than relying on a pure platform model.
The key takeaway is that companies do not necessarily need to launch a standalone marketplace or social network to benefit from platform economics. Instead, they should look for opportunities to extend their products in ways that enable customers to connect with each other and with third parties. This approach may be particularly important in AI, where the Hagiu & Wright suggest that platforms connecting users, developers, agents, tools, and applications could develop more durable competitive advantages than the underlying models alone.
Read the full article here: https://platformchronicles.substack.com/p/platforms-are-still-the-best-businesses
