From The Wall Street Journal
In the 1990s, the internet was supposed to usher a much more open, decentralized, democratic economy and society. Startups with innovative business models were now able to reach customers anywhere, anytime. Companies, from the largest to the smallest, could now transact with anyone around the world. Vertically integrated firms became virtual enterprises, increasingly relying on supply chain partners for many of the functions once done in-house. Experts noted that large firms were no longer necessary and would in fact be at a disadvantage in the emerging digital economy when competing against agile, innovative smaller companies.
Some even predicted that the internet would lead to the decline of cities. People could now work and shop from home; be in touch with their friends over e-mail, video calls, and text messaging; and get access to all kinds of information and entertainment online. Why would anyone choose to live in a crowded, expensive, crime-prone urban area when they could lead a more relaxing, affordable life in an outer suburb or small town?
But, as we well know, it hasn’t quite worked out as expected. Instead, we’ve seen the rise of the global superstar company, the unicorn startup, and the winner-take-all city. As it’s turned out, the internet’s universal reach and connectivity has led to increasingly powerful network effects and to the rise of platform economies.