Citation: Henten, A.; Windekilde, I. Demand-Side Economies of Scope in Big Tech Business Modelling and Strategy. Systems 2022, 10, 246. https://doi.org/10.3390/ systems10060246 Academic Editor: William T. Scherer Received: 1 November 2022 Accepted: 5 December 2022 Published: 8 December 2022 Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affil- iations. Copyright: © 2022 by the authors. Licensee MDPI, Basel, Switzerland. This article is an open access article distributed under the terms and conditions of the Creative Commons Attribution (CC BY) license (https:// creativecommons.org/licenses/by/ 4.0/). systems Article Demand-Side Economies of Scope in Big Tech Business Modelling and Strategy Anders Henten 1 and Iwona Windekilde 2, * 1 Communication, Media and Information technologies, Department of Electronic Systems, Aalborg University, 2450 Copenhagen, Denmark 2 Department of Information Security and Communication Technology, Faculty of Information Technology and Electrical Engineering, Norwegian University of Science and Technology (NTNU), 7034 Trondheim, Norway * Correspondence: iwona.windekilde@ntnu.no Abstract: The purpose of the paper is to discuss the issue of economies of scope in platform research and to attract attention to the importance of scope economies for the strength and growth of Big Tech corporations. Hitherto, most attention has been on network effects and demand-side economies of scale, on the role of platforms in lowering transaction costs, and on the importance of big data. More specifically, the research question addressed in this paper is how economies of scope, driven by the demand side, contribute to the strength of successful Big Tech corporations. The answer is related to two aspects: one is concerned with bundling of services and products, and the other with the acquisition and processing of data on users and their activities using digital services and applications. Keywords: demand-side economies of scope; economies of scale; Big Tech corporations; business models 1. Introduction Big Tech corporations have become increasingly powerful organizations in various media, communications, and information areas. They have branched out into multitudes of different service and product areas. Amazon, for instance, started out in e-commerce selling books and has since then expanded into a wide variety of different areas, including audiovisual media, and has lately, in March 2022, acquired the MGM movie studio. Other Big Tech corporations have also expanded into large numbers of business areas. Apple, for example, developed a health app, which is, indeed, an app and, therefore, a piece of software. However, it takes Apple into an area of societal activities that it hitherto has had no experience with. In the business literature, the most commonly used explanatory frameworks for analyzing the power and growth of Big Tech corporations are related to combinations of demand-side economies of scale based on network effects [1–3], transaction cost eco- nomics [4–6], and the use of big data on users [7,8]. These frameworks constitute very strong foundations for understanding how Big Tech corporations have become some of the strongest and most powerful corporations of our time, and at least the most valuable. Formerly, two-sided or multi-sided businesses have, indeed, existed, but only in niche areas and as niche activities. However, with digitalization, such business models have become the basis not only for strong and powerful corporations but also for the fastest-growing corporations during the past two decades. However, demand-side economies of scale and transaction costs only partly explain the development paths of Big Tech corporations. These theories and analytical frameworks explain the extraordinary growth of the individual business areas of the corporations, but they do not explain the increasing scope of business areas in which they operate. For this purpose, an approach referring to economies of scope is needed. However, as with economies of scale, where network effects turn the issue ‘upside down’, focusing primarily on the demand side and not on the supply side, the same approach can be Systems 2022, 10, 246. https://doi.org/10.3390/systems10060246 https://www.mdpi.com/journal/systems