In today’s digital age, why has there been a rise in monopolistic companies like Google and Uber — something not seen since the late 1800s? Boston University professor Marshall Van Alstyne says he knows the answer.
Van Alstyne, a professor in information systems at the Questrom School of Business, and Geoff Parker, a professor of engineering innovation at Dartmouth College, were named 2025 Thinkers50 honorees for their research on platform business models.
The Thinkers50 Awards, the first-ever global ranking of management thinkers, aims to highlight the most influential ideas in the business world. Van Alstyne and Parker created the idea of the “inverted firm,” a company whose value is created externally rather than from the inside.
Some of the most notable examples of inverted firms, Van Alstyne said, are platform businesses like Uber or TikTok, which do not directly serve customers. Instead, third parties like drivers or content creators give rides and make videos.
“Now, roughly seven of the 10 most valuable firms in the world are platform businesses,” Van Alstyne said.
For inverted firms, outside networks affect the production of revenue rather than internal operations, he said.
Inverted firms can create value while using fewer resources, and their value increases as they gain users. There is an opposite effect — revenue increases while cost decreases, Van Alstyne said.
“There’s so much value effectively being created with fewer resources, because they’re harnessing resources that they don’t own,” he said.
Van Alstyne said the implication of his research is that companies need to find new policy interventions to manage what happens both inside and outside the firm. While traditional businesses have to manage production and sales separately, both lines are linked to each other for inverted firms.
For traditional firms, producers and consumers are two separate entities to be managed separately, Van Alstyne said. But inverted firms often have to deal with the fact that the demand and supply side of the economy work hand in hand.
“You have to manage marketing outside the firm. You have to manage information technology communities outside the firm. You have to estimate the value of financial resources outside the firm. You have to handle operations, management and inventory outside the firm,” he said.
Parker said he and Van Alstyne were influenced by the distribution of free digital services during the “dot-com bubble,” the boom of internet companies that emerged in the late 90s and early 2000s. They decided to question the business model behind it.
“There wasn’t a really good set of economic theories as to when you could give away free things and actually make money,” Van Alstyne said.
After generating 20 to 30 examples of free digital goods and services, Parker said they found a novel multi-sided network theory. Businesses can provide free goods and services to one type of consumer, as long as they bring in more consumers they can charge.
“The demand that consumer has depends on the presence of another type of consumer,” he said. “If you can provide that other type of consumer in your network at zero or even negative price, you can make money from the other type of user who wants to get access to the first type of user.”
While technology companies have been the main adopters of this model, fields like journalism that have traditionally relied on information or intellectual property have been heavily affected, Van Alstyne said.
The news industry, Van Alstyne said, has been reliant on advertising and user attention — which technology companies like TikTok or Google now compete for.
By adopting and adapting to the inverted model, Van Alstyne said, news businesses can potentially recapture revenue and user attention from the monopolies of free platforms like TikTok.
Van Alstyne’s Platform Governance Research Lab at BU searches for ways to regulate platform businesses to combat misinformation and misleading advertising.
BU junior Vedant Kejariwal joined the lab in September 2024 and is working on one of its projects, an interactive marketplace that simulates various consumer-producer relationships — such as putting AI sellers against human buyers, which some companies like Amazon are using now.
Van Alstyne said he sees AI as a tool that can help firms both predict where outside value can be created and create it themselves, “without humans in the loop.” But they need to understand the governing mechanisms and regulations behind AI in order to design it to interact responsibly with humans.
“I think it will genuinely revolutionize the digital platform industry, both in e-commerce and in social media,” Kejariwal said. “I see so much fake news and AI-generated videos. I don’t even know what’s real.”
Bin Gu, a professor and department chair of information systems at Questrom, said Van Alstyne is a “pioneer” in digital platform research — contributing to the department’s reputation in the field.
“In today’s economy, we [have] really seen his idea become reality,” he said. “Professor Van Alstyne’s research is really critical to the identity of the department.”
