The Antitrust Analysis of Rules and Standards for Software Platforms and Its Implications for China

May 19, 2015

CPI Asia Column edited by Vanessa Yanhua Zhang (Global Economics Group) presents:

The Antitrust Analysis of Rules and Standards for Software Platforms and Its Implications for China – David S. Evans (Global Economics Group) & Vanessa Yanhua Zhang (Global Economics Group)¹

Introduction

Many people use software platforms and the applications that run on them during much of the day for work and leisure. They run our mobile phones, computers, and videogame consoles and are behind our social networks. New ones are behind innovations in payments, transportation, health and fitness, connected homes, and connected shopping, all of which are transforming how we live.

Software platforms create value by providing an environment in which many different types of economic agents can benefit.² These economic agents typically include end users, application developers, and hardware makers. They may also include advertisers, content providers, and other economic agents depending on the platform and the business model it has adopted.

There are positive externalities between these different groups.More demand from any group of economic agents usually increases the value of the platform to the other groups of economic agents. As with other multi-sided platforms there are positive indirect network effects: more applications leads to more end users, which leads to more interest from application developers and hardware makers, and so forth.

Software platforms also have c