Myopic Expansions on Digital Platforms
Platforms that ease frictions can tempt participants into myopic large-scale expansions that lower customer satisfaction and performance.
Summary
The study analyses 484,943 apps across 21 categories on Apple's App Store in 2017, a matched comparison of 94 apps that expanded rapidly in June 2017 with 94 controls, and 16 developer interviews. Because the platform presents more than 155 countries as default launch options, developers largely ignored geographic and cultural distance when choosing where to launch, even in categories that need localisation. The expansions raised downloads at first, but above-median expanders saw user ratings fall about 4.2%, innovation and updates drop about 30%, and rankings and revenue worsen, with the damage greatest for products that need customisation for each market. The authors describe a paradox of frictionless platforms: removing entry barriers enables fast scaling but also encourages neglect of the differing preferences of local customers, which hurts the complementors' own performance and their customers' satisfaction.
Editor's opinion
Making expansion easy can lead firms to expand badly: when a platform offers every country at the click of a button, developers launch everywhere without adapting, and the downloads they gain are paid for with lower ratings, less innovation and worse rankings. Firms should treat the ease of entry offered by a platform as a temptation to scale before they are ready, and platforms that care about quality should build in prompts for localisation.
Key concepts
myopic expansion · digital platforms · market friction · app store