Competition Logics during Digital Platform Evolution

Abstract

How are platforms built and how do they evolve? This is a salient question in digital ecosystems, where the competition has moved from traditional one-sided business logics to multi-sided platforms. In this paper, we explore how a digital platform evolves when the organization of the multilayered platform architecture, and related control points, is modified through competitive moves. We also examine how a firm may be able to manage the increased complexity of the platform. We show that when technical and strategic bottlenecks are solved, the platform owner can expand control to strategically important layers of the platform stack. The findings indicate that the complexity of the platform increases through a series of competitive moves. However, complexity can be managed by increasing the standardization of the platform interfaces, and by jockeying for a stronger position in critical parts of the platform stack.