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How much platform competition is too much competition? For example, what is the optimal number of mobile operating systems or video game consoles that will spur competition and innovation in those respective sectors?

It is an interesting business question, but it also has some policy implications since some might propose laws or regulations to remedy a perceived lack of platform competition in various sectors. After all, many people would answer the above question by saying that there is never such a thing as too much competition. The more platforms the better. But there can be costs associated with too much competition. Let’s consider those two case studies mentioned above: mobile operating systems or video game consoles.

Mobile Operating Systems As my colleague Berin Szoka has pointed out, we are witnessing the rapid proliferation of mobile operating systems, especially on the open source front. So, we’ve got Apple’s iPhone platform, Microsoft’s Windows Mobile, Symbian, Google’s Android, the LiMo platform, and OpenMoko.

One one hand, all this platform competition sounds great. But as Ben Worthen of the Wall Street Journal’s “Business Tech Blog” points out in a piece today: Continue reading →