Platform Competition Flashcards
What does horizontal disintegration mean?
Moving from vertical integration where one company does all parts of product, to horizontal, where every company does one part - End of Chandlerian hand
What were the main critique of modularity, leading to platformisation?
- no link between technical and market modularity - powerful company - can offer more modules
- How open is open enough - giving everything away ?
- System integrators not legoland - network flagships - big companies to lead the way
- In ICT, Platforms are important with structural and durable character
What is platformisation?
It is the type of modularity that is based on a platform (black box) of untouchable modules, to which other modules are open to connect.
PlatformL Bottleneck within 2-sided market
What is 1-sided and 2-sided platforms?
1 - Car using parts from other companies, no relation between partners and customers
2 - Apple Store providing relation between 2 sides of the market
How did platformisation change the management model?
Supply chain management:
Selective access to partners
squeezing partners financially
Business ecosystem management:
Open access to partners (apps), minimal barriers, no focus on quality
Open opportunity to make money
What are platforms strategy to reach Critical mass?
- Sequential entry: I get side A, then side B. Media: get an audience, then get advertisers. doesn’t work for credit cards e.g.
- Entry with pre-commitment investment. gaming, netflix
- Simultaneous entry (often with prestige members(famous singer on music platform))
- Basic ZigZag: get a few from side A then few from side B, then few from A…..
What are some platforms strategies to leverage network effects? (keeping the users)
- Move early, be the first
- Subsidise product adoption, Buy market shares
- Viral promotion
- Redefine the market - new categories of users
- Alliances - Partnerships
- Distribution channels
- Seed the market with complementary goods
- Maintain backward compatibility - with older generations
- Compatibility with larger networks
- Block reverse compatibility (if big)
- Strategic pre-announcements (Apple) -
Some typologies of Platforms
Value Creation: Leverage SS Network Effects, Leverage CS Network Effects
Value Capture: Charge Users, Monetisation via Other Users
SSxC: Linkedin
SSxM: Facebook
CSxC: Netflix
CSxM: Youtube
Levels of Openness: Open/Closed
Demand side: OS (Open) - Cable TV (Closed)
Supply Side: (App dev): Mac (Open) - iPhone (Closed)
Platform Provider: Windows (Open) - MacOS (Closed)
Platform Sponsor: Linux (Open) - Windows (Closed)
Ballon’s: Neutral - Broker - Enabler - Integrator
What parameters define platform openness?
2 Parameters:
Control over Assets CA: elements in the value proposition
Control over Customers CC: elements in customer relationship
No CC x CA: Enabler Platform, Intel (not an Intel Client, but they control the partners)
No CC x No CC : Neutral Platform, PayPal
No CA x CC: Broker Platform, eBay (They don’t care about what is sold, but control my account)
No CA x No CA: Integrator Platform, iPhone
Strategies in a Multi-Platform matrix
Horizontal Expansion: Belgacom buying Scarlet
Silo Competition: Exclusive products
Vertical Expansion: Cable company buying TV
Vertical Commodification: Ads skip - Killing vertical competitors
Diagonal Expansion: Telecom and Streaming, Proximus+Netflix
Envelopment: Create alternative to an unrelated platform: telecom creating new streaming service.
Regulations
Traditional regulatory framesworks not equipped to deal with online Plaforms
Tech and sector-neutral view should be developed for platform regulation
Taking into account the specific business models
EU:
2017: Digital Single Market, assessments, industry-led, etc.
Findings:
Removal, suspensions,
Ad Placements, search, etc.
Favoritism, discrimination of 3rd Parties
Lack of redression
Options: Soft laws promoting transparency, full regulations
But: no definition of market, no clear view on market power
