Creative Destruction in Digital Ecosystems Revisited

For a long time, a prevailing view was that due to the dynamic nature of competition in digital markets intervention by antitrust authorities would do more harm than good. It was assumed that the permanent risk of disruptive innovations, Joseph Schumpeter’s “perennial gale of creative destruction,” would sufficiently discipline any digital incumbent. Even a position of dominance was presumed to be inherently temporary as rivals were only “one click away,” switching costs low, and network effects reversable. Accordingly, when Microsoft/OpenAI launched ChatGPT in November 2022, expectations went viral that “Google is done,” only to witness Google counter with its own chatbot Bard within just three months. This article outlines why many assumptions relating to the disciplining force of potential disruptions are no longer sustainable in digital ecosystems with incontestable moats