THE COEVOLUTION OF PLATFORM DOMINANCE AND GOVERNANCE STRATEGIES: EFFECTS ON COMPLEMENTOR PERFORMANCE OUTCOMES

Multisided platforms such as Apple’s App Store and Valve’s Steam become increasingly dominant when more end users and complement producers join their ecosystems. Despite their importance to a platform’s overall success, however, we know little about complement producers and how they are affected by a platform’s dominance trajectory: How does a platform’s increasingly dominant market position affect performance outcomes for complementors? We explore this question by conducting a multiple case study on four market leading platform ecosystems over several years. We discover that, as a platform becomes increasingly dominant, the platform sponsor’s governance strategies shift from being largely supportive of the wider complement population to becoming more selective and geared toward end users. These changes are associated with shifts in complementor performance outcomes. Although the value created at the overall ecosystem level increases as a platform gains dominance, average demand for individual complements decreases and becomes progressively concentrated. Furthermore, we find that prices for complements decline, whereas the costs complementors incur increase. These findings are particularly salient in the context of digital platform ecosystems, where platform sponsors can seamlessly alter their technological infrastructures and implement changes to extend and solidify their dominant positions.