A multi-sided platform must serve two or more groups of customers.
For example, credit card companies serve both shoppers and merchants
or shopping malls that bring together shoppers and merchants. Another
necessary condition is that these customer groups must benefit from
the mediating platform (create network effects). For example, if more
retailers decide to carry a particular credit card, the more benefits
to the customer carrying the credit card. By using the platform, all
parties must derive a clear and tangible benefit. For example, they
create value through efficiency gains and creation of options that
provide flexibility to deal with evolving uncertainty. A final
condition that we have identified is the creation of control points.
Control points are the set of components within the platform that are
vital to the creation and appropriation of value. They are also very
influential in the performance of application that run on top of the platform.
In Google's case, their customers use the search engine for many
reasons. One obvious reason is the simple and easy to use interface
with very little clutter. Another reason is Google's superior search
algorithms that find relevant results. The vast repository of indexed
pages is also very attractive to customers. Another group that Google
serves well is the set of firms providing complementary services.
Google provides them with easy access to their services and that they
can use to build applications that work on top of Google's platform.
These firms constitute the developer community that is vital to
Google's success. As more developers use Google's facilities to
launch applications, consumers find more value in using Google's
search engine. Google's services are also used by firms to build
their brand and advertise on the Internet. These firms use products
that are provided by Google or by a third party developer to sell
their wares to customers who use Google as their search engine. All
of them derive tangible benefits. Customers find relevant search
results and ads. Developers launching applications productively by
reusing and extending Google's services. Firms using AdSense for
serving up ads can also use its reporting facilities to track
effectiveness of campaigns. Since all applications have to call
Google's search engine, using public APIs that have to be invoked
every time, to get relevant results, Google controls how much and how
many times any given user can call its APIs. This gives it
architectural control over its ecosystem partners.
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