Friends or foes? Examining platform owners’ entry into complementors’ spaces

• Date: 01 January 2019
• DOI: http://doi.org/10.1111/jems.12303
• Published date: 01 January 2019

Received: 27 August 2018

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Accepted: 28 August 2018

DOI: 10.1111/jems.12303

Friends or foes? Examining platform owners’entry into

complementors’spaces

Feng Zhu

Department of Technology and

Operations Management Unit, Harvard

University, Cambridge, Massachusetts

Correspondence

Feng Zhu, Department of Technology and

Operations Management Unit, Harvard

University, Cambridge 02138, MA.

Email: fzhu@hbs.edu

Abstract

As platform owners continue to expand their ecosystems, many of them have

started to provide consumers with their own complementary applications.

These moves position the platform owners as direct competitors to their

complementors. This paper surveys empirical studies that examine the direct

entry of platform owners into complementors’product spaces. It finds that both

the motivation and impact of such entries on complementors are multifaceted.

The motivation behind platform owners’direct entry goes beyond value

capture, and the impact of platform entry on complementors varies across

empirical settings. It identifies several future research directions that can help

advance our understanding of the relationships between platform owners and

complementors.

KEYWORDS

multisided markets, platform‐owner entry

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INTRODUCTION

As platforms become increasingly important in our economy, concerns are growing about platform owners’

misuse of their market power with respect to their value creation partners. In particular, many platform owners

imitate complementors and enter their product spaces with similar offerings. These moves position the platform

owners as direct competitors to their complementors. For example, Netscape, a complementor on Microsoft’s

Windows platform, was effectively extinguished by Microsoft’s own offering, Internet Explorer (see, e.g.,

Cusumano & Yoffie, 1998). Meerkat, a mobile app that enabled Twitter users to broadcast live video streaming to

their followers, vanished after Twitter acquired its competitor Periscope and cut off Meerkat’saccesstoTwitter’s

social graph. Apple, having offered Google Maps as a popular preinstalled application on its iPhone and iPad

mobile devices since 2007, has built its own replacement map service. Many third‐party sellers in Amazon’s

marketplace complain that Amazon is competing against them by sourcing the same products directly from

manufacturers (e.g., Zhu & Acocella, 2017; Zhu & Liu, 2018). The European Union (EU) imposed a record‐high

fine on Google for leveraging its dominance in the search engine market to favor its own comparison‐shopping

service. These examples suggest that the business model of building complementary products on a platform may

involve considerable risks. Except in a few high‐profile cases—such as the Microsoft antitrust trial (see, e.g.,

Shapiro, 2009; Whinston, 2001) and the EU’s fining of Google—antitrust measures have rarely offered any

remedy.

The textbook explanation for why a platform owner should provide some of the complementors itself is that these

complementary applications help solve a chicken‐and‐egg problem (e.g., Evans, Hagiu, & Schmalensee, 2006; Hagiu &

Spulber, 2013): Without an existing base of platform users, no complementors would be interested in supporting that

J Econ Manage Strat. 2019;28:23–28. wileyonlinelibrary.com/journal/jems © 2018 Wiley Periodicals, Inc.

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ORIGINAL ARTICLE