Final answer:
Data creates a competitive advantage when it results in unique insights that cannot be easily replicated, but fails when it is not effectively used or when competitors have similar capabilities.
Step-by-step explanation:
Data can create a competitive advantage for companies by allowing them to better understand their customers, optimize their operations, and personalize their offerings. However, this advantage can fail to materialize when data is not leveraged effectively or when competitors are also able to access and utilize similar data. Andrei Hagiu and Julian Wright discuss the potential for new information and communications technologies to either enable small firms to expand their reach or to lead to 'winner-take-all' markets dominated by large firms. This reflects the larger controversy over whether technology enables increased competition or reinforces market dominance.
There is caution advised against accepting claims from those with vested interests in a product's success. Also, the role of government policymakers is significant in ensuring a balance between the benefits of scale and the need for competition. In essence, data can provide a competitive advantage when it translates into unique, actionable insights that competitors cannot easily replicate, ultimately benefitting consumers with better products and services.