ERC Starting Grant: Fair Competition in App Markets (2024 – 2029)

App markets—such as Apple’s App Store or Google Play—have significant economic importance and drive digital innovation. In 2021, for example, the App Store alone facilitated transactions worth over EUR 511 Bn, which equals the GDP of Sweden.

However, app market operators have also attracted severe scrutiny from regulators due to their integrated gatekeeper structure: they operate a marketplace while also competing within them with their own apps. This gives app market operators an incentive for self-preferencing: they promote their own apps over third-party apps, consequently distorting competition and harming app innovation.

Uncertainty remains regarding how self-preferencing can effectively be counteracted with public policy inter-ventions. Although legislators have advanced bills to restrict self-preferencing, including the Digital Markets Act, existing theoretical models are scant, make mixed predictions, and lack empirical validation. This uncer-tainty is problematic because app markets represent a complex node of the digital economy where regulatory interference—if not done “right”—can likewise harm innovation.

This project will empirically assess how several public-policy interventions against Apple's and Google's self-preferencing impacted app innovation in their app stores.

DFG: Decision Architecture on Search Engine Platforms (2024 – 2027)

A key question for research, companies and politics is what influence the design of a search engine platform has on the interactions between companies and customers – known as the decision architecture. Previous research results show that sometimes minor changes in the decision architecture can significantly influence user behavior.

The aim of this research project is to investigate the effects of one of the most widely used decision architectures on search engine platforms for companies, the so-called “infinite scroll”. Infinite scrolling means that instead of a page-by-page (horizontal) results page, the user views a continuously expanding vertical results page. Laboratory experiments have shown that users behave differently in case of infinite scrolling; in particular, their time spent on the site and their interactions increase fundamentally. Despite the widespread use of infinite scrolling, the effects on companies and the market are barely understood.

In order to understand the effects, this research project conducts a quasi-experimental study on Google's search engine platform. The research design follows a difference-in-differences estimation and uses the country-specific introduction of infinite scrolling to divide into experimental and control groups. Hypotheses on the effects of infinite scrolling on website operators' traffic, search volume, website quality and advertising costs are tested. Comprehensive and new data from a search engine analytics company will serve as the data basis.

This research project will make it possible to understand the effects of infinite scrolling on companies and the market – and thus complement the research that has so far focused on user behavior. The results will expand the scientific understanding of decision architectures on digital platforms with regard to one of the most widely used decision architectures. The results will make it possible to estimate the economic impact of infinite scrolling by providing reliable causal estimates.

The project has great social relevance, as the decision-making architecture of intermediaries is of great interest to legislators and regulatory authorities, particularly with regard to competitiveness and consumer protection. The results enable the evidence-based regulation of decision-making architectures on search engine platforms.

DFG: Competition with the platform operator: An empirical-quantitative study of mobile app platform ecosystems (2020 – 2024)

Digital innovation platforms are one of the key changes for companies triggered by digitalization. At the core of digital platforms is a software-based infrastructure (“platform”). This platform is provided by one or more companies (“platform operator”). The platform operator allows other companies to develop and commercialize complementary products and services on the platform (“complementary company”). A well-known example is the iPhone: Apple allows a large number of companies to provide complementary offers in the form of “apps”. Apple benefits from a constant stream of new apps; complementary companies gain access to a large number of customers. The market entry of the platform operator represents a significant business risk for complementary companies. Platform companies such as Apple, Google and SAP regularly enter the complementary market of their own platforms with their own products. For example, in 2018, Apple surprisingly announced an app called ScreenTime, which gave users an overview of the time they spent on their iPhone. However, there were already several companies offering apps with similar functionality. From the point of view of the general partner companies concerned, this could have far-reaching and in some cases existential consequences. Complementary companies are now in direct competition with the platform operator, which can ultimately lead to them being squeezed out of the market, and the risk of market entry by the platform operator is insufficiently understood in current economic research. Previous research has dealt with complementary market entry primarily from the perspective of the platform operator. It focuses on the question of whether platform operators should enter complementary markets and what impact this has on the performance of complementary companies. However, these studies do not explain when complementors should expect the platform operator to enter the market, and the aim of the proposed research project is to understand which factors favor the risk of market entry by the platform operator. A model is to be tested that relates the characteristics of the niches of the complementary market to the complementary market entries of the platform operator. To achieve this goal, a quantitative-empirical study is to be carried out in the context of the mobile app platforms Apple iOS and Google Android. This study requires the development of a comprehensive data set on market entries by platform operators. The project applied for is intended to improve the strategies and product development decisions of complementary companies so that they can be considered before the risk of future market entries by the platform operator.