This is an MIT Sloan Management Review article. Executives often look at the network effects of digital platforms as a key source of competitive advantage -without understanding that platforms need to also leverage other factors at play in the local markets and among preferred customers. Network effects can help, but on their own, they offer very limited competitive value.

In late 2013, Bloomberg LP, the financial information powerhouse, was challenged by a competing messaging service owned by a consortium of banks, many of whom were Bloomberg's customers. This development came when growth was slowing and news was emerging that Bloomberg's business practices may have compromised the privacy of its customers. Did these events serve to open fissures in the company's ability to maintain industry dominance? This case asks students to consider Bloomberg's business model and the industry's competitive landscape to assess the company's market position.