Algorithm Envelopment in Platform Markets

Market power in platform markets has attracted significant regulatory and scholarly attention. Previous research suggests that platform owners shape competitive dynamics through strategic actions such as merging with other platforms (e.g., Farronato, Fong, & Fradkin, 2023), entering into complementors’ markets (e.g., Kapacinskaite & Mostajabi, 2024; Khan, 2017; Wen & Zhu, 2019; Zhu & Liu, 2018), altering platform governance (e.g., Chung, Zhou, & Choi, 2024; Rietveld & Schilling, 2021), or enveloping related markets (e.g., Eisenmann, Parker, & Van Alstyne, 2011; Gawer & Henderson, 2007). Yet, given the limited research on competition and regulation in platform markets in strategic management, further research is encouraged to directly address this important topic. Within a platform market, complementor firms themselves are also heterogenous in terms of market power that they can accrue. For instance, through acquisitions, complementor firms can develop economies of scale and scope on both the technology- and user- sides such that future entrants are deterred (Wang, Yue, Rajagopalan, & Wu, 2024). Complementors that have developed stronger network effects (Eisenmann, 2007; Rochet & Tirole, 2003) are also in a more powerful position when it comes to negotiating with the platform owner (e.g., Epic Games vs. Apple and Google). However, because platform markets, such as Apple’s App Store and Alphabet’s (Google’s) Play Store, are relatively closed economies where complementors are typically smaller firms compared to the platform owner, within-platform competitive dynamics and the loci of power have attracted less regulatory attention. In this symposium, we assemble a set of recent strategic management research tackling this cutting-edge issue—that is, competition and regulation in platform markets. We focus on two major themes when putting together this symposium: first, platform owners’ actions that are likely to attract antitrust scrutiny; and second, competitive dynamics among complementors within a platform market that are likely to attract regulatory attention. The Hidden Costs of Fairness in Platform Markets: The Dynamics of Lowering Developer Royalty Rates Author: Annamaria Conti; IE University Author: Juan Santalo; IE University Who gets to play? Effects of regulation-induced platform governance change on complementors Author: Madhulika Kaul; City - University of London Author: Joost Rietveld; Post-mates No More? Complementor Engagement Following Platform Acquisition Author: Hyuck David Chung; University of Illinois at Urbana-Champaign How Does Ecosystem Technological Structure Shape Complementor's Strategy Author: Cameron D. Miller; Syracuse University Author: Elena Plaksenkova; The Ohio State University Author: Shiva Agarwal; The University of Texas at Austin

OTT 서비스를 주도해온 넷플릭스에 대항해 디즈니+ 등 많은 기업들이 OTT 플랫폼 시장에 뛰어들고 있다. 이에 2019년 말부터 거대 IT 미디어 콘텐츠 그룹들이 참가해 치열한 경쟁을 하고 있는 글로벌 OTT 서비스 플랫폼의 현황을 살펴보고 시장을 전망하였다. OTT 플랫폼 시장과 유사한 가정용 콘솔 게임 하드웨어, 게임 ESD 플랫폼 시장의 경쟁 사례를 비교한 결과, 자체제작 독점 콘텐츠 경쟁력, 콘텐츠 IP의 다양성, 서드파티 정책을 통한 외부 콘텐츠 IP의 확보가 플랫폼 시장의 점유율과 연관됨을 알 수 있었다. OTT 플랫폼의 경쟁력 또한 콘텐츠 IP를 어떻게 운용하느냐에 달려 있다. 본 연구가 한국의 OTT 플랫폼들이 추구해야 할 콘텐츠 IP 운용 전략에 적절한 방향성을 제시할 수 있기를 기대한다.Global media companies such as Disney, Apple, and Google are jumping into the OTT service platform market against Netflix leading global OTT service recently. This study focused to prospect the global OTT service platform market where huge media contents groups fiercely compete to survive from the end of 2019. The competitions in domestic console game hardware and game ESD platform markets which have similar context with OTT platform market, are investigated as comparative models. We pointed out that competitiveness of original monopolistic contents, diversity of contents IP, and securing external contents IP by third-party policy would essentially affect the platform share through results of the case study. A competitiveness of the OTT platform is also up how to operate contents IP. The result of this study is expected to suggest a direction of valid management strategy of contents IP for Koran OTT platforms.

Assessing Monopoly Power or Dominance in Platform Markets

China and the United States host the world's largest digital platforms. Platforms are multisided markets that facilitate value‐creating exchanges among users, such as social media, e‐commerce, software QJ;application downloads, search, email, and cloud services. Internet access and the purely digital nature of many of the products and services make digital platforms potentially global in scope. This means that the rules and restrictions governing the flow of capital and information services among national markets strongly influence the economic and social potential of digital platforms. The paper conducts a sequential analysis of the rise of barriers to the United States–China trade in ICT and digital platform markets from 2000 to 2021. We find that China's thriving platform economy was relatively open, competitive and market‐driven in its early stages, and benefited from U.S. capital and the entry of U.S. firms. Since 2009, both countries have progressively restricted access to each other's domestic information services markets. In both cases, the primary stated rationale involved national security claims rather than trade policy concerns. Drawing on International Political Economy theory, we label the United States–China interaction pattern digital neo‐mercantilism. Digital neo‐mercantilism fuses the power and security of the national state with economic development in the digital economy. Policymakers represent information flows and digital technologies in domestic policy discourse as critical to the security and relative power of the state, and pursue various forms of industrial policy, data localization, trade protectionism, or exclusion of foreigners as a result. Both the United States and China are following this policy.

Digital technologies have led to the emergence of many platforms in our economy today. In certain platform networks, buyers in one market purchase services from providers in many other markets, whereas in others, buyers primarily purchase services from providers within the same market. Accordingly, network interconnectivity—which measures the degree to which consumers in one market purchase services from service providers in a different market—varies across different industries. We examine how network interconnectivity affects interactions between an incumbent platform serving multiple markets and an entrant platform seeking to enter one of these markets. Our model yields several interesting results. First, even if the entrant can advertise at no cost, it still may not want to make every user in a local market aware of its service, as doing so may trigger a competitive response from the incumbent. Second, having more mobile buyers, which increases interconnectivity between markets, can reduce the incumbent’s incentive to fight and, thus, increase the entrant’s incentive to expand. Third, stronger interconnectivity between markets may or may not make the incumbent more defensible: when advertising is not costly and mobile buyers consume in both their local markets and the markets they visit, a large number of mobile buyers will increase the entrant’s profitability, thereby making it difficult for the incumbent to deter entry. However, when advertising is costly or mobile buyers only consume in the markets they travel to, a large number of mobile buyers will help the incumbent deter entry. When advertising cost is at an intermediate level, the entrant prefers a market with moderate interconnectivity between markets. Fourth, we find that even if advanced targeting technologies can enable the entrant to also advertise to mobile buyers, the entrant may choose not to do so in order to avoid triggering the incumbent’s competitive response. Finally, we find that the presence of network effects is likely to decrease the entrant’s profit. Our results offer managerial implications for platform firms and help understand their performance heterogeneity.