El arbitraje en el Derecho romano

In many two-sided markets, a fraction of the users on either side (or both sides) connect to multiple platforms instead of just one. Using an analogy from Internet terminology, they are said to “multi-home” (Rochet & Tirole, 2003).

Common examples of multi-homing include merchants who accept multiple credit cards (e.g., Visa, MasterCard, American Express) and PC users who have more than one web browser installed on their computer (e.g., Microsoft Internet Explorer and Mozilla Firefox). In the former example, multi-homing actually occurs on both sides, as many consumers also carry more than one credit card. In the latter case, many (though not all) web sites are fully compatible with either browser.

Multi-homing has profound implications on the competitive dynamics and pricing of platforms. More specifically, a large proportion of multi-homing users on one side of the market intensifies price competition on the other side from the perspective of platform providers. Therefore, platform providers of-ten need to lower prices to stay competitive and attempt to secure exclusive relationships with users on the other side. As an example, merchants may be inclined to turn down the more costly³ American Express credit card, if they accept other cards such as Visa and also know that a large percentage of their American Express carrying clientele also have a Visa in their wallet.

Such a situation increases price pressure towards the platform provider (Amer-ican Express in this case) who has to either close the price gap or somehow convince their users that the price premium is justified. As noted by Rochet

& Tirole (2003), American Express has afforded to charge higher merchant discount rates because their clientele was perceived as very attractive by mer-chants. The gap between American Express’s and the non-profit associations’

merchant discount rates has narrowed in the 1990s as an increasing number of American Express customers also got a Visa or MasterCard, thus lowering the incentive for merchants to accept American Express cards.

In general terms, multi-homing as a phenomenon stems from the users’ desire to benefit from network externalities in an environment of incompatible or non-interconnected platforms. Using an analogy from the real estate market, in the absence of common listing, the seller of a house may want to establish multiple, non-exclusive arrangements with real estate agencies in order to reach a wide range of potential buyers. Similarly, potential buyers may also deal with multiple real estate agencies. As a further example, video game developers may port their game to several game platforms. More generally, software developers may multi-home to competing but incompatible software platforms. (Rochet

& Tirole, 2006)

3in terms of merchant discount rates; as an example, refer to UniBul (2012).

Armstrong (2006) has studied the phenomenon of multi-homing especially in situations where one side of the market is single-homing and the other is multi-homing. Such situations, which he refers to as “competitive bottlenecks”, have special implications on the pricing of the platform with respect to the two sides of the market. In such situations, if users on the multi-homing side wish to interact with a user on the single-homing side, they have no other option but to deal with that particular user’s platform of choice. Hence, platforms have monopoly power over providing access to their single-homing customers for the multi-homing side. This monopoly power, according to Armstrong (2006), leads to high prices being charged to the multi-homing side, limiting the number of users on that side. A notable exception to this is a market that tips to monopoly, in which case an incumbent’s profits typically increase with the importance of network effects, since barriers to entry remain high even when the incumbent sets high prices. The tendency towards high prices for the multi-homing side is, however, tempered when the single-homing side benefits from having many users on the other side of the market (i.e., the cross-side network effects are strong in that direction). In such cases, high prices to the multi-homing side would drive away users on that side and cause an overall disadvantage to the platform as it tries to attract users to the single-homing side. In contrast, platforms do have to compete for the single-single-homing users, and the profits generated from the multi-homing side are largely used to subsidize the single-homing side. (Armstrong, 2006)

Multi-Homing in Mobile Application Stores

Mobile application marketplaces or stores, examples of which include the Ap-ple App Store, Google Play (formerly Android Marketplace), BlackBerry App Center, and Windows Phone Store, are a common manifestation of two-sided markets in the mobile business domain. They are also a prime example of a two-sided market where multi-homing occurs, to an extent, on both sides of the market. Specifically, either developers or consumers (end users) can multi-home, and there are incentives and deterrents to each. For developers, the primary incentive to multi-home is to expand their addressable market by reaching more consumers than they would reach by targeting only a single platform. Obviously, the smaller the overlap between the user bases of differ-ent platforms, the greater the benefit of targeting additional platforms. Con-versely, if it’s possible to reach a large enough mass of consumers by developing applications for a single platform, adding support for an additional platform may not be financially attractive enough, considering the additional invest-ments required and the increased risk level. For developers, multi-homing is therefore largely a cost-benefit consideration between revenue and profit po-tential as well as market share and development costs and risks.

Consumers, on the other hand, have relative freedom of choice in deciding which devices they purchase, but as most smartphones and tablets have an expected consumer life cycle of roughly two years, there tends to be at least some degree of lock-in to the ecosystem. Some users may opt to purchase devices from different ecosystems (e.g., an Android-based smartphone but an iPad tablet), thus gaining access to two distinct software ecosystems and their application stores. In this way, they satisfy their desire to benefit from net-work externalities in an environment of incompatible or non-interconnected platforms, as already noted above. Also, while Windows-based PCs still dom-inate the personal computing market, it is quite safe to assume that a major share of iPhone users use a Windows-based PC instead of a Mac computer, making them multi-homing users. While gaining access to a larger catalog of diverse applications may be a benefit for some users, multi-homing on the consumer side is also discouraged by compatibility issues (e.g., in transferring personal data and content between devices) and increased complexity, as the consumer will often need familiarize him/herself with different user interfaces and application logic.

In the mobile business domain, multi-homing has been studied by, e.g., Hyryn-salmi et al. (2012) across competing mobile application stores, and by Idu et al.

(2011) in the specific case of three sub-ecosystems of the Apple ecosystem, each centered around a product line: the iPhone, the iPad, and the Mac. The latter paper analyses the behavior of companies that target more than one Apple sub-ecosystem using statistical analysis and survey methods. Its findings con-firm a strong relationship between the number of platforms a company targets and the type of applications it publishes as well as the number of these ap-plications. It also recognizes that the most common trend for developers was that of first targeting the iPhone platform and then the iPad. Idu et al. (2011) argue that multi-homing from a strategic perspective is motivated mainly by a wider customer base and the portability the Apple sub-ecosystems offer. This is well in line with the notion that access to a wider addressable market is the main incentive for multi-homing, and the downside of increased development costs is mitigated by the portability of applications across the sub-ecosystems.

Hyrynsalmi et al. (2012) acknowledge that from the software developer’s per-spective, the choice of ecosystem (platform) might be a crucial decision and that some developers have chosen to target two or more ecosystems, balancing between a greater potential market share and the costs of porting the product for different platforms. They note that generally speaking, a publishing strat-egy where content, products, or services are published for multiple ecosystems is not new even in the mobile business domain, but there are relatively few studies and little knowledge on the effects of multi-homing on applications, developers, and ecosystems, or the scale of the phenomenon. They also argue that the level of competition between mobile ecosystems is high, and the

appli-cation offering can be used as a means of differentiating from the competitors.

However, if multi-homing were indeed a common strategy for developers, then the catalogs of rivaling application stores would be very similar and differen-tiating on that basis would be hard.

Based on a quantitative analysis of three large application stores (Apple App Store, Google Play, and Windows Phone Marketplace) and a total of more than 850,000 applications, it turns out that the number of multi-homing developers is small, constituting only 6.8% of the total number of developers identified (Hyrynsalmi et al., 2012). Considering that the ecosystems analyzed seem to contain lots of hobbyist or semi-professional developers who publish “just for fun” or without a clear monetization plan, the result is less surprising. Also, based on the data, it seems that the content consumption of consumers is mostly focused on a tiny fraction of applications which are usually published by professional developers and which are also often available for several mobile OS platforms. Hyrynsalmi et al. (2012) argue that these professional developers, who often also tend to multi-home, are the crucial ones to bring on board for any ecosystem.

Hyrynsalmi et al. (2012) mention the example of Rovio Entertainment’s then-latest mobile game in the Angry Birds franchise called Angry Birds Space which was initially announced for iOS and Android but not for Windows Phone. Later, however, the game and a subsequent title have been made avail-able also for Windows Phone, but it is not publicly known whether Microsoft or its OEM partners (mainly Nokia) had to subsidize the porting of the games.

As noted, adding support for a platform requires usually significant additional investments from a developer. If those investments cannot be justified by the expected revenue increase, outside financing in the form of development or marketing subsidies may be required to incentivize multi-homing. Such subsi-dies could be costly for the ecosystem orchestrators, but they have few viable options available to foster innovation as long as they lack the market share to create enough developer pull by themselves. For an ecosystem, not having the most popular applications available would likely lead to a negative consumer perception which would hinder the growth of said ecosystem. Hence, it is quite reasonable to deduce that the presence of key professional developers and their applications can make or break a mobile software ecosystem.