When «the» market loses its relevance: an empirical analysis of demand-side linkages in platform ecosystems

Recent lite­ra­tu­re has shown that the exi­sten­ce of sup­ply and demand-side non-gene­ric com­ple­men­ta­ri­ties („demand-side lin­ka­ges”) within eco­sys­tems questions the per­ti­nen­ce of defi­ning a sin­gle rele­vant mar­ket com­pri­sing sub­sti­tu­te pro­ducts (”sub­sti­tu­ta­bi­li­ty appro­ach”). Howe­ver, empi­ri­cal metho­do­lo­gies to measu­re the­se lin­ka­ges and assess the com­pe­ti­ti­ve dyna­mics under­pin­ning them are lac­king. Using recent data from inter­net traf­fic betwe­en the major 246 Euro­pe­an digi­tal plat­forms, we deve­lop such a metho­do­lo­gy and test some the­ore­ti­cal fin­dings of the eco­sys­tems lite­ra­tu­re with major impli­ca­tions for com­pe­ti­tion and regu­la­to­ry ana­ly­sis. We cor­ro­bo­ra­te that demand-side lin­ka­ges are a non-negli­gi­ble phe­no­me­non: 18% of the­se plat­forms show them. Howe­ver, unli­ke what the eco­sys­tems lite­ra­tu­re pre­dicts, in rough­ly half of the cases they do not link com­ple­men­tors but plat­forms com­pe­ting in at least one mar­ket. Final­ly, whi­le, as expec­ted, we obse­rve demand-side lin­ka­ges mostly within indu­stry-defi­ned eco­sys­tems, we find evi­den­ce of indu­stry-agno­stic eco­sys­tems. The­se could be orche­stra­ted „orga­ni­cal­ly” by plat­form users inste­ad of by a firm. We conc­lu­de that the sub­sti­tu­ta­bi­li­ty appro­ach is not obso­le­te, but requ­ires being com­ple­men­ted with alter­na­ti­ve appro­aches in order to i) take into acco­unt coope­ti­tion within the same rele­vant mar­ket and ii) ana­ly­ze how the com­pe­ti­ti­ve pro­cess in one mar­ket can impact the welfa­re gene­ra­ted in ano­ther (indu­stry­’s) mar­ket thro­ugh non-gene­ric complementarities.