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The next industries where digital platforms could threaten today’s incumbents

As government scrutiny grows, tech giants are making acquisitions in other sectors and threatening current winners, PwC’s Industry Gini Index shows.

Amazon. Apple. Facebook. Google. Born in the tech industry, they’ve evolved to become dominant digital platform companies, and their actions have a ripple effect on countless other companies. As their power has grown, so has government scrutiny, including the July 2019 announcement by the US Justice Department of a broad antitrust review into the platforms.

While still considered “big tech” by many, these platforms are actually “market makers” that are making investments and causing disruption elsewhere. Their pursuit of growth beyond tech could accelerate if the companies face government regulations that aim to address competitive concerns. Exactly where the platforms will go next is a common guessing game. A new measurement from PwC, the Industry Gini Index, has answers.

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How digital platforms dominate

The Industry Gini Index shows which industries are ruled by a few dominant players, based on the consolidation of value among leading companies. Technology hardware, storage and peripherals tops the 2019 index, reflecting the dominance of the digital platforms. As explained in Platform Revolution, these platforms capture two-sided network effects because they combine supply economies of scale with demand economies of scale, enabling value-creating interactions between external producers and consumers. That means that more businesses contributing to a platform attract more customers, who then attract more contributors, and so on.

As they’ve invested in various technology, intellectual property and other assets, these platforms have evolved in such a way that they can work in multiple environments—making their own markets. PwC has found that as industries see investment from new entrants capable of disruption, the Industry Gini Index score initially drops, then increases at a greater rate, forming a J-curve. The decline happens as valuations for previous market leaders fall. The index score then begins to rise as the strongest competitors start taking over.

Consider the personal computer industry, which saw its index score fall throughout the 2000s, bottoming out in 2008. New investments and innovations included Apple’s introduction of the iPhone, disrupting the industry after the company had suffered setbacks in the 1990s. The popularity of the iPhone and related devices ultimately propelled Apple’s value upward, establishing it as the new industry leader.

View the 2019 US Industry Gini Index

The data: Two sectors set for significant disruption

The combination of size and agility has led to much speculation about which industries the platforms will conquer next. Shipping and logistics? Banking and finance? Insurance? Hospitality and travel? Amid all the possibilities, a PwC analysis found two sectors in particular where market makers were investing significantly and where the sectors’ Industry Gini Index scores have fallen in the past year. Both illustrate the platforms’ desire to connect with customers on more personal levels and help people better manage their lives.


In 2018, the leading tech-oriented companies sank 14% of their total startup investment into healthcare—far more than they put into computer hardware, services or electronics, a PwC analysis of CB Insights data found. The opportunity isn’t hard to imagine. Health spending in 2018 was about 18% of US GDP, up from 13% in 2000, according to federal data. A platform may not want to manage medical practices or assisted living centers, but monitoring, medical devices and product delivery make sense. Amazon’s 2018 acquisition of online pharmacy PillPack is one example.

The Industry Gini Index scores for healthcare technology, supplies and distribution all declined in 2019. Incumbents in those areas are weakening in value, yet few question the growth potential in these areas. The aging of a larger segment of the population, longer life spans and the desire for real-time health information are just a few factors. But the declining index scores are linked to investors downgrading the incumbents’ prospects as market makers position to enter and disrupt.


Consumer products and services startups won more investments from market makers than healthcare startups did in 2018, CB Insights data shows, although the total investment amount was less. But consumer is a broad industry, offering many entry points. Two investments from Google in 2018 illustrate this range: a minority stake in Go-Jek, an Indonesian ride-hailing service, and the acquisition of Workbench, which provides lessons and projects to use in classrooms.

While most industries saw their scores rise in the 2019 Industry Gini Index, both consumer staples and consumer discretionary fell. To be sure, other factors could affect consumer incumbents’ value, particularly as some former retail giants continue to downsize or battle bankruptcy. But that also speaks to the opportunity for further disruption, as platforms have the means to engage consumers in a new arena and potentially emerge as the new leaders.

Where to from here?

With market makers looking beyond their native sectors for business growth, it raises important considerations for companies in industries that could see more investment from new entrants. Those companies should consult advisors with expertise in digitization, analytics, valuation and other key areas to help answer critical questions:

  • How should your industry’s physical markets move towards digital network platforms that can increase enterprise value?
  • How can your business use all of the tools at its disposal, including customer knowledge, artificial intelligence and advanced analytics, to become a digital network platform company?
  • Can your company best achieve growth by competing with, supporting, partnering with or being acquired by market makers?
  • Does your business have the potential to become a market maker? If so, what are the industries where expansion could increase your company’s enterprise value?
  • How much can a market maker dominate an industry before concerns about an anti-competitive environment arise?
  • What other possible actions could generate more value in a market maker world?

Understanding how market makers work and reviewing the Industry Gini Index are starting points for answering these questions. Companies that recognize the new competitive dynamics and make strategic investments will have a clearer path to winning in the years ahead.

About the Industry Gini Index

The Industry Gini Index is based on the Gini Coefficient, a measure of inequality across a group that is best known for economic studies of income inequality within nations. PwC calculates the Industry Gini Index using enterprise value data for the top 10 publicly traded companies in each US industry from Capital IQ. Enterprise value is the value of a company’s operations calculated as the market value of equity plus debt minus cash and equivalents—in effect, how much a buyer would have to pay for those operations. As fewer companies dominate an industry, there’s more inequality in enterprise value, and the index score is higher.

The index’s Gini Coefficient calculations use an analytic equation developed by Nobel Prize-winning economist Angus Deaton. The original coefficient value ranges from 0 to 1 have been scaled to 0 to 100.

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John D. Potter

Partner, Consumer Markets Deals Leader, PwC US

Marc Suidan

Deals Principal, PwC US