Do Digital Tech Firms Really Earn Excess Profits? Prof. Anup Srivastava Explains

Dr. Anup Srivastava, Canada Research Chair in Accounting – Decision-Making and Capital Markets at the Haskayne School of Business, University of Calgary, discusses his research titled “Do Digital Technology Firms Earn Excess Profits? Alternative Perspectives.” In this study, he explores whether digital technology firms particularly major tech giants truly earn excess profits, and examines whether such profitability arises from market power or from innovation. Professor Anup Srivastava’s research on digital technology giants tackles a central policy question: do firms like Amazon, Apple, Microsoft, Meta, and Google truly earn excess profits, and if so, why. He shows that traditional accounting metrics such as return on assets systematically mismeasure the performance of knowledge-intensive firms because they expense critical intangible investments like R&D, data, and brand-building, making the most innovative companies appear unprofitable on paper. By instead using internal rate of return and correcting for both profits and invested capital, his work documents that digital tech firms have generated supernormal returns, often between 30 and 60 percent far above their cost of capital in an era of low interest rates. The evidence points to a mix of powerful innovation (new markets, long-horizon investments, high-value patents) and significant market power (dominant platforms, high switching costs, data advantages), leaving regulators, investors, and corporate leaders with the nuanced task of distinguishing value-creating innovation from rent-extracting behavior in the digital economy. This podcast is brought to you by Global Management Consultancy. For more information, please visit www.globalmanagementconsultancy.com. Disclaimer: A. The background music incorporated in this video is the intellectual property of its respective developer and is protected under applicable copyright laws. Notwithstanding that it is a free-to-use version, Business Talk, Global Management Consultancy, and Deepak Bhatt do not own, and expressly do not claim, any rights, title, or interest in or to this music. B. Dr. Anup Srivastava shared insightful perspectives from his research, “Do Digital Technology Firms Earn Excess Profits? Alternative Perspectives,” during his conversation on the Business Talk podcast channel. The uploaded video contains copyrighted content, so changing any graphics, music, or on-screen appearance of the author or host is not allowed.