Dominant Platform Expansion Into the Market of Complementors: A Resource Dependence Perspective

Platform sponsors sometimes expand into complementors’ market spaces, directly competing with third-party complementors. Among these complementors, hardware device makers play a crucial role as vehicles for platform sponsors to diffuse their software platforms to end users. Using data from operating system (OS) platforms and hardware device makers in the global mobile phone industry, we find that when the sponsor of a dominant OS platform increases its market share in the device maker market with its own platform-based devices, it subsequently faces a reduction in its market share in the platform sponsor market. Drawing on resource dependence theory, we explain this as a consequence of device makers anticipating the growing power imbalance of the dominant platform’s sponsor. As a result, they seek alternative OS platforms, weakening the dominant OS platform’s market performance. We find that the negative impact of the dominant platform’s sponsor expansion into the device maker market is contingent upon the platform’s openness to device makers and the prevalence of winner-take-most outcomes. Our findings contribute to the literature on resource dependence and competition in platform ecosystems, highlighting the conditions under which a dominant platform’s sponsor expansion into complementor markets can undermine its market dominance.