Effects of Platforms’ Entry into Own Marketplace: Evidence from the Mobile Application Market

Abstract
We study the competition effects of platforms entering their own marketplaces in the context of
mobile applications. Using a rich panel dataset of monthly observed applications on the most
prominent mobile ecosystems, Apple and Android, we seek to understand how the launch of a new
application by the platform owner affects consumers and third-party developers (developers). We
find evidence that Apple’s efforts have positive effects on developers and encourage innovation. But
on the Android platform, introduction of a Google app decreases the number of users for developers’
apps. This is likely a substitution effect rather than suppression as developers do not decrease their
expansion on the Android platform. In general, we find evidence of platform vertical integration
having positive impacts for consumers and developers, and only quite weak evidence of suppression.

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