EU ANTITRUST: HOT TOPICS & NEXT STEPS

EU ANTITRUST: HOT TOPICS & NEXT STEPS 2022

Prague, Czechia

the dominant platform designs, more app developers dared to invest in their platforms (Markovic and others, 2018, p. 6). Complementors in the periphery of the core platform can still innovate after the emergence of a dominant design. Even if Android and iOS are the dominant core platforms, app developers can still innovate on those operating systems. Complementors design and develop their own functionality within the boundaries that the core platform gives them. This means that even when a dominant design has emerged on the core platform level, and innovation is no longer a competitive constraint on the market power of core platforms, more significant changes can still be expected in the periphery of the product (Zeijen and others, forthcoming). In the periphery of the platform, innovation can therefore still be a competitive constraint on the companies in the periphery of platform, such as app developers. In sum, a dominant design is the key turning point for innovation as a competitive constraint on online platforms. Before a dominant design emerges, innovation makes the future trajectory of the market uncertain and unpredictable. A new undertaking can enter the market at any time with an innovation and take over the market. After a dominant design has emerged, this is less likely to happen and innovation is no longer a competitive constraint on the core platform. Yet, it can still constrain the complementor firms that operate in the periphery of the core platform. 3.2 Determining the emergence of a dominant design If the emergence of a dominant design is the key turning point for using innovation as a competitive constraint, it is important to know how to determine when we can speak of a dominant design. A dominant design has emerged if a majority of designs in the market is the same. The notion of a majority of designs can be defined empirically by using either a threshold (e.g., 50, 40, 30, 20% market share) measure or a variety measure (such as the Herfindahl index) (Murmann and Frenken, 2006, p. 944). To determine whether a dominant design has emerged, it is not the market shares of an undertaking that needs to be measured but the design. In economic theory, using only the empirical calculation ofmarket shares is regarded as oversimplified and insufficient to determine the existence of a dominant design (Anderson, Tushman, and O’Reilly, 1997; Murmann and Frenken, 2006, p. 944). This criterion has therefore been expanded with three further characteristics to know whether a dominant design has emerged. Besides a 50% market share of the dominant design, the design needs to be the archetype of the product in both the user and the designer’s imagination, the design needs to provide an answer to the need of a large number of people and the winning design freezes the socio-economic context (Anderson, Tushman, and O’Reilly, 1997). For example,

74