Platform competition is rivalry between platforms, and the ecosystems around them, for users, partners and suppliers on several sides at once. It can end with one winner, a dominant leader or several platforms side by side.
Table of Contents
Types of platform competition
- Platform against platform: rival platforms fight for the same users and complementors, as mobile operating systems do.
- Platform against partners: the owner competes with firms that build on it, for example by adding their features to its core product.
- Partner against partner: complementors on the same platform compete for its users.
Key factors
- Network effects. Strong effects favour one winner. Local effects let rivals win city by city.
- Multihoming and switching costs. A market tips to one winner only when using several platforms, or leaving one, is costly.
- Differentiation. Platforms with distinct supply or a distinct identity can live alongside a larger rival.
- Bundling. A platform can enter a neighbouring market by bundling a rival’s product into its own, a move called envelopment.
- Expectations. Users join the platform they expect others to join, which helps incumbents in the short run.
Examples
Microsoft. In July 2020 Slack complained to the European Commission that Microsoft bundled its Teams chat app with Office. In September 2025 the Commission accepted Microsoft’s binding commitments, lasting seven to ten years. Microsoft will sell Office without Teams at a lower price and improve interoperability with rival tools. The case turned on envelopment.
Shein. In 2023 the shopping platform Temu sued Shein in the US, claiming Shein’s exclusive deals with clothing makers locked it out of 70 to 80% of ultra-fast-fashion suppliers. Stopping suppliers from multihoming denies a rival platform supply. In 2025 a federal court dismissed the antitrust claims, ruling that the conduct and harm lay outside the US.
Frequently asked questions
What is the difference between platform competition and ecosystem competition?
Platform competition is about winning users and complementors on each side. Ecosystem competition sets whole networks of partners, suppliers and complements against each other, so a platform with fewer users can still win.
Can a smaller platform beat a dominant one?
Yes, though rarely on scale alone. Challengers that succeeded offered clearly better benefits or technology and enough complements, usually while users could try both platforms cheaply.
Why do some platform markets have several winners?
Because users often use more than one platform, network effects are local or weak, or rivals serve different needs. Each of these stops the market tipping to a single leader.
How do regulators treat competition between platforms?
Through competition law and newer rules such as the EU Digital Markets Act and the UK’s digital markets regime, which target conduct that blocks rivals, such as bundling and self-preferencing.