Platform Compatibility and Developer Multihoming: A Study of Firefox and Chrome

Abstract

The competition between technological platforms often centers around the ecosystems of the platforms. A potential strategy for a platform with market disadvantage is to make itself compatible with competing platforms to attract the multihoming of competitors’ developers. However, there are many unresolved questions regarding how a platform’s compatibility strategy impacts developers’ multihoming decisions and subsequent performance. In this study, we use the context of web browser platforms, i.e., Firefox and Chrome, to empirically investigate how the strategic increase of platform compatibility by a secondary platform (Firefox) influences the multihoming decisions of developers from a primary dominant platform (Chrome). We also investigate the subsequent development choices and performance outcomes in multihoming. Our results show that the increased platform compatibility helps the secondary platform attract a larger proportion of small developers from the primary platform and encourages the development of exclusive apps for the secondary platform. Moreover, we find that increased platform compatibility facilitates multihoming developers to leverage their primary-platform experiences to enhance their secondary-platform app performance, and this effect is influenced by the development type (porting or exclusive development). Our study generates unique insights that add to the theoretical understanding of the implications of platform compatibility to platform competition.

Keywords: platform competition, two-sided markets, network externalities, platform compatibility, multihoming, exclusive product