Partners Damien Geradin and Stijn Huijts had the pleasure of sitting down with Joost Rietveld, an Associate Professor of Strategic Management at the UCL School of Management, University College London, to discuss his fascinating insights into platform competition and strategy.
Joost has been a major contributor to the public debate in this area in the past few years. He is an expert on platform competition and platform strategy—topics on which he has published research articles in top academic journals in the fields of business strategy, innovation management, and entrepreneurship. He also conducts research on how digitization facilitates new and innovative ways of doing business including the freemium and platform-based business models. Joost has done extensive research in the video game industry after having worked as a strategic manager and consultant for several years prior to entering academia. Joost operates Platform Papers, an online resource that collects, organizes, and translates academic literature on platform competition and Big Tech.
How did you end up studying platforms, and why do you think this is a key topic?
After graduating, I found a job at a video game developer in the Netherlands. I quickly realized that a lot of our business was heavily impacted by the platforms we released our games on. We would release the exact same game across two different platforms and achieve rather diverging sales performance. This, I learned, was influenced by the platforms’ installed base, the extent of competition from other games on these platforms, and whether or not the platform promoted our games, which, in turn, had a lot to do with our or the publisher’s relationship with the platform. This was back in 2008-2010. Platform strategies were a lot less refined at the time, but you could already see how much of a ‘market maker’ big platforms like Apple’s Appstore, Nintendo’s WiiWare, and Valve’s Steam were at the time. When I decided to study for a PhD, I knew I wanted to learn more about these platforms and particularly how small companies like ours were affected by them. That’s how I ended up studying platform strategies and competition dynamics.
What is a highlight in your academic career so far?
This is a tough question to answer. Ultimately, as an academic I aim to have impact through my work. This can be accomplished through publishing research articles, teaching students, organizing events and myriad other ways to disseminate research findings. While it feels like just yesterday since I received my own PhD degree, last year I had the pleasure to coach my first-ever PhD student through the academic job market and help him find a job. I could not have asked for a better first PhD student than Joe Ploog, who’s now an Assistant Professor at IE University in Madrid. Joe started his PhD under my supervision when I was still a faculty member at the Rotterdam School of Management at Erasmus University. Joe made the decision to join me at UCL, which wasn’t entirely without risks. This move, however, paid off well given that we have since published several articles together and that Joe is now on his own successful career path. Helping the next generation (of scholars) and seeing them thrive certainly is a highlight.
Can you tell us a bit more about what you are trying to achieve with Platform Papers?
Platform Papers is a … platform that aims to organize the academic literature on platform competition and Big Tech in the fields of economics, information systems, management, and marketing, and to make it more accessible to a broad audience of market participants.
There are three main components to Platform Papers:
- A Substack blog. I publish a monthly blog (mostly) written by prominent scholars who translate their recently published research articles for a wider audience. Some recent blogs cover topics such as network effects, generativity, and vertical integration.
- The Platform Papers website. The key resource here is a References Dashboard with more than 650 academic articles on platform competition. The dashboard is searchable and can be filtered using various parameters. The dashboard is updated monthly.
- A literature review article. Together with my mentor and co-author Melissa Schilling (NYU) I conducted a survey of the academic literature on platform competition. The resulting article was published in the Journal of Management in 2021.
The literature review is what started it all. At the time, we identified 333 academic articles on platform competition (implying the literature has nearly doubled in the last four years) and I wanted readers to be able to identify the articles underpinning our review. I launched Platform Papers as a data repository and decided to keep it up to date as new articles got published.
I soon realized that the website attracted not only academics but also various market participants looking to learn more from this literature. That’s when I decided to launch the Substack blog in 2022. With it I am hoping to enhance the dissemination of academic research on platform competition and to add some substance to the public discourse on platforms and Big Tech.
You provided valuable comments during the Microsoft/Activision merger, including explaining why cloud gaming should not be viewed as a platform. Could you expand on this a bit?
I am generally reluctant to get involved in external matters, but in the case of Microsoft/Activision I felt I had to. This was a matter concerning platform competition in the context of video games—essentially what I had been studying all my career. I closely tracked how the CMA scrutinized the $68 billion merger. Towards the end of its Phase 2 investigation the regulator converged on two main issues: 1) the effects of Microsoft potentially making Call of Duty games exclusive to Microsoft’s Xbox gaming console, and 2) how the merger would impact the nascent cloud gaming space. Then, quite suddenly, the regulator dropped its first concern citing revisions to its impact calculations. I had thought that if the deal would get blocked, it would be over concerns related to the vertical effects of the merger in the console space, and not over concerns related to cloud gaming, which was economically insignificant and not something Activision was relying on for the distribution of its games. In my view, the arguments the CMA put forward about how the acquisition would impact cloud gaming were underdeveloped, I thought that the anticipated effects were rather speculative given the economic insignificance of cloud gaming and its unproven track record since 2003, and I believed that the market definition was misconstrued given the different ways cloud computing is used as a technology for distributing gaming content. That’s when I decided to submit to the CMA a report titled Cloud Gaming Is Not a Distinct Market documenting my views. The report got picked up by several media outlets including the Financial Times, Bloomberg, and Gamesindustry.biz among others. I did some work for Microsoft and I was frequently asked to comment on the rather dynamic situation. Looking back, it was one of the most exciting (and stressful, at times) periods in my professional career to date!
What is your view on management scholars getting involved in the public debate on major public policy issues like that? What view can they offer that is not sufficiently represented in the debate?
Scholarly engagement over regulatory concerns in the context of antitrust competition is traditionally preserved for academics in the field of economics. Economists have the tools to define market boundaries, to assess counterfactual scenarios, and to calculate damages. Notwithstanding the value of these tools, they typically paint with a broad brush and rely on copious assumptions. The devil is in the details and this is where management scholars can help. Management scholars are all about heterogeneity and tend to conduct contextualized analyses.
Furthermore, regulators are starting to realize that to properly assess the impact of, say, a merger, it is productive to deeply understand what the synergies are by assessing the merging entities’ dynamic capabilities and business models. These terms have popped up a lot lately, especially in relation to digital platforms. Turns out, these are concepts that originated in management research! There is more than 25 years of management research on dynamic capabilities and more than 20 years of management research on business models—a concept that was specifically developed with an eye on explaining value creation in e-businesses. Admittedly, management scholars can and should do more to precisely define these terms, how they translate to a given context, and what their implications are beyond theoretical outcomes such as ‘value creation’ and ‘value capture,’ but I believe there is a lot to be gained by reaching across the aisle.
For example, one area where management scholars can help is in understanding and formulating ecosystem theories of harm. At one point in Microsoft/Activision, the CMA’s cloud gaming concern was framed as an ecosystem theory of harm. The concern, so the argument went, was that the acquisition would allow Microsoft to strengthen its network effects, raise entry barriers, and foreclose rivals in cloud gaming as a result of a strong multi-product ecosystem. The theory of harm put forward here was a ‘multi-product ecosystem’ theory of harm, which is distinctly different from a ‘multi-actor ecosystem’ (theory of harm). Given the wealth of knowledge on (platform) ecosystems—219, or 33%, of all Platform Papers are published in management journals—I believe management scholars are in a strong position to flesh out the nuances between different ecosystem theories of harm, their potential mechanisms, and key focus areas.
The European Union has made a major step in regulating the platforms operated by the “gatekeepers”. Where do you stand on the debate on whether that regulation is a good thing?
I believe it is generally a good thing that regulators are stepping up their scrutiny of large digital platforms. First, a significant share of our social interactions and financial transactions take place on digital platforms. It is important to look out for consumers as well as complementor firms that rely on these platforms for market access. Second, digital platforms are generally at ‘risk’ of becoming dominant/attaining market power. This is not only because of network effects and learning from user interactions, but also because it has become easier for platform firms to improve and expand on their offerings without having to release new (hardware) products that would otherwise reset their user base. Third, novel regulatory frameworks are appropriate given the various new ways digital platforms cement and expand their positions. Fourth, there is both academic and anecdotal evidence that digital platforms worsen their conduct towards their users once they attain a dominant market position—a shift Cory Doctorow calls the ‘enshittification’ of digital platforms. Fifth, and finally, once any company has passed a certain threshold of economic significance, I believe it is fitting for regulators to increase their monitoring of such firms, simply given the extent of implications in case of any abuse of dominance or misconduct. That being said, it is important that the regulators’ scrutiny can be scrutinized and that there is ample opportunity for recourse, given the novelty of both the substance and the arguments at play.
Can you tell us a bit about your plans for the next few years?
I have a few things lined up for the next 18 months or so. First, I am organizing a conference on digital platforms and ecosystems at the UCL School of Management on June 27 and 28. The European Digital Platform Research Network (EU-DPRN) aims to consolidate, integrate, and further develop ongoing efforts to advance research on digital platforms and ecosystems. I am currently in the process of putting together the scholarly program. The conference will also feature a policy panel hosted by Verity Egerton Doyle (Linklaters) with confirmed participation by Kristina Barbov (Microsoft), Tom Smith (Geradin Partners), and Oliver Latham (Charles River Associates). We’re hoping someone from the CMA can also join us for the panel.
Second, I’ll have a sabbatical in the academic year starting this September. Besides clearing my research backlog, I am particularly excited about two main activities. First, I will take a summer course on Competition Law and Policy at the London School of Economics. As I increase my engagement with external matters related to the regulation of digital platforms, I feel it’s imperative to better understand the legal frameworks by which these platforms and their conduct are governed. Second, I plan to spend time at a renowned research university on the U.S. east coast as a Visiting Professor. Although we’re still working on sorting out the paperwork, I am looking forward to expand my network and build new research collaborations.
When I get back from my sabbatical, I will launch a new graduate-level course tentatively titled Competition in Digital Markets. I will also start working with a new PhD student. I am involved in an ongoing antitrust matter as an expert witness. At some point, I might write a ‘sequel’ to the literature review article that was the impetus for Platform Papers, which I aim to expand.
What do you think competition lawyers and economists get right about platforms, and where do you think they can still improve their understanding?
Economists have laid the groundwork for our current understanding of how platforms and two-sided markets work. This includes important insights on (in)direct network effects, price subsidization strategies, and the tipping of markets characterized by network effects. Lawyers and regulators have built on these foundational insights to make their cases. These contributions have and still are the cornerstone for much of the ongoing research on platform competition. As the landscape of (digital) platforms continues to become ever-more diverse and variegated, however, it will be important to allow for nuance and heterogeneity as we update our thinking about these complex and ever-changing structures. As mentioned before, I believe that using insights from different disciplines—not just management, but also marketing and information systems—can aide in doing so. Recent signs from lawyers and regulators have been promising!
