During a new technology cycle, market leaders emerge, because they solve new problems
and create new value, not only for consumers but also for a rich ecosystem of suppliers,
intermediaries and even competitors. Even though these market leaders receive a
disproportionate share of the profits, earning so-called ‘Schumpeterian rents’ as they dominate
the emerging market, value creation is a rising tide that lifts all boats. However, this kind of
virtuous rising tide rent, which benefits everyone, doesn’t last. Once the growth of the new
market slows, the now-powerful innovators can no longer rely on new user adoption and
collective innovation from a vibrant ecosystem to maintain their extraordinary level of profit.
They often turn to extractive techniques, using their market power to try to maintain their now-
customary profits in the face of macroeconomic factors and competition that ought to be eating
them away. They start to collect robber baron rents. This pattern has played out throughout the
history of the computer and software industry. As the industry begins a new cycle fuelled by
generative AI, what can we learn from this history that might guide entrepreneurs, regulators
and policymakers?