Competition with the Platform Owner: A Quantitative-empirical Study of Mobile-App-Platforms

• Applicant: Professor Dr. Jens Förderer
• Subject Area: Accounting and Finance
• Term: from 2020 to 2024
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 453186120

One of the main implications of the digitalization for firms are digital innovation platforms. At the core of digital platforms is a software-based infrastructure ("platform"), which is operated by one or several firms (“platform owner”). The platform owner allows third-party firms (“complementors”) to develop and commercialize products based on the platform. A well-known example is the iPh-one: Apple allows other firms to provide complementary products in the form of "apps". Apple benefits from a constant stream of new apps; app developers gain access to a large installed base of users. Today, many complementors, especially Startups build their business on digital platforms.A significant business risk for complementors is platform owners’ entry into their market space. Platform firms such as Apple, Microsoft and SAP regularly enter markets complementary to their platforms with own complements. For example, in 2018 Apple surprisingly announced an app called ScreenTime, which gave users an overview of the time they spent on their iPhone. Several firms had been offering apps with similar functionality before and were now confronted with hav-ing to compete with Apple. For affected complementors, entries by the platform owner can be consequential, eventually leading to them going out of business.Extant research provides little insight into the risk of market entries by the platform owner. Previ-ous research predominantly studied the consequences of entries on complementors. However, these studies provide little insight into the factors that explain market entries. Understanding the systematics behind platform owners’ entries would help improve complementors’ decision-making regarding what market niches to join and what complements to offer. The aim of the research project is to address this gap by studying the factors that explain market entries by the platform owner. The goal is to examine the relationship between the characteristics of individual ecosystem niches (e.g. the quality of the complements, the innovation performance) and the market entry by the platform owner. In order to achieve this goal, a quantitative-empirical study will be conducted in the context of the mobile app platforms Apple iOS and Google An-droid. The iOS and Android ecosystems will be divided into market niches in a systematic proce-dure. A comprehensive data set on market entries will be built up for the period 2008 to 2020.

• DFG Programme: Research Grants