A new book, ‘The Business of Platforms: Strategy in the Age of Digital Competition, Innovation and Power,’ tries to understand why and how platforms fail.

The book’s authors divided all platforms into two types: Innovation platforms such as the Google Android and Apple iPhone operating systems that enable third-party firms to add complementary products and services to a core product or technology, and transaction platforms such as Amazon Marketplace, Airbnb, or Uber that facilitate the exchange of information, goods, or services.

Reasons for failing platforms include an inability to recognize the power of network effects (“getting the prices right and identifying which sides to subsidize remain the biggest challenges”) and not being able to establish mechanisms for building trust in new markets.

Harvard Business Review

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