Innovation and profitability following antitrust intervention against a dominant platform: The wild, wild west?Click here to read the full article online
This study examines whether “unblocking” competition through antitrust intervention against a dominant platform can spur complementor innovation in platform ecosystems. Using a novel dataset on enterprise infrastructure software and a difference-in-differences design, we examine the relation between the U.S. antitrust intervention against Microsoft (dominant enterprise platform) and subsequent innovation and profitability of infrastructure applications firms (complementors). The data show that innovation among complementors—particularly ones with low market share—soared when the competitive pressure on the dominant platform amplified. However, the profitability of these complementors dropped. Our results contribute to understanding links between competition and innovation in platform ecosystems, as well as the opportunities and threats related to dominant platforms in those ecosystems.