Treffer: Opening First-Party App Resources: Empirical Evidence of Free-Riding.

Although platform owners create significant entrepreneurial opportunities for third-party developers, they frequently compete with them by entering the same markets. This study examines the impact of opening a first-party app's resources on rivals' innovation. Unlike prior research, which assumes that first-party apps have exclusive access to their resources, our study reveals that increased openness of first-party apps leads to free-riding benefits for rivals. This openness boosts rivals' consumer demand, thereby fostering greater innovation. Our findings show that rivals attract more consumers because of complementary offerings available through alternatives, rather than through improved experiences provided by third-party apps utilizing the first-party app's open resources. Our research provides two key implications. First, beyond platform openness, platform owners might consider first-party apps' openness as a strategy to enhance the ecosystem's evolvability. Second, third-party developers can enhance their innovation capabilities to better exploit the free-riding benefits stemming from the openness of first-party apps. Platform owners are releasing their own apps on their platforms. These first-party apps (FPAs) typically leverage platform resources more effectively, competitively threatening rivals. Although the impact of FPAs on rivals' innovation has been the subject of extensive study, the dominant view in previous research assumes that these FPAs are closed to third-party apps (TPAs). However, there is an increasing trend of FPAs opening their resources to TPAs, as they provide application programming interfaces (APIs) allowing TPAs to access their resources. Rivals still exist, as many TPAs choose not to have access to FPAs' open resources because of their limited control over these resources. Does opening an FPA's resources impact rivals' innovation? The answer to the question is largely unknown. We exploit the release of the Apple Health Records API, a feature that opens Apple Health Records to TPAs, to design a quasi-experiment that investigates whether and how opening an FPA's resources influence rivals' innovations. Through several analyses, we conclude that opening an FPA's resources to TPAs generates free-riding benefits for rivals. Moreover, these benefits mainly arise because of the growing presence of TPAs that do not adopt FPAs' open resources in the market. We discuss the theoretical contributions and practical implications of our findings. [ABSTRACT FROM AUTHOR]

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