Managing Platform Ecosystems

Abstract

We examine how control over a technology platform can increase profits and innovation. By choosing how much to open and when to bundle enhancements, platform sponsors can influence choices of ecosystem partners. Platform openness invites developer participation but sacrifices direct sales. Bundling enhancements early drives developers away but bundling late delays platform growth. Ironically, developers can prefer sponsored platforms to unmanaged open standards despite giving up their applications. Results can inform antitrust law and innovation strategy.