ICIM 2018 Capturing Value from Data Driven Online Platforms: Alliance Strategy of the Incumbents Junko Okayama Department of Innovation Research, Japan Science and Technology Agency, Tokyo, Japan, 1020076 (E-mail:
[email protected]) Abstract Platform business is considered as a competitive business model. Especially, the emergence of “data driven online platformers” represented by GAFA (Google, Apple, Facebook and Amazon) is challenging various industries including the incumbent platformers. This paper aims to reveal the way for incumbent platformers to deal with the situation by cooperating with the “data driven online platformers”. As a result of case study, new hypothesis was derived. Leveraged by its data centric structure, the essential function of “data driven online platform (DDOP)” was identified as an ability to create new value by interconnecting users in different platforms which made the network effect more multifaceted. Incumbent platformers can benefit from this multifaceted network effect by promoting platform alliance with DDOP. Creating “new adjacent market” which is sandwiched by both platforms seems to be key success factor for incumbent platformers in this alliance where further discussion is needed. Keywords :online platform, platform alliance, multi-sided network effect, value creation 1 Introduction Platform businesses are considered as a competitive business model. Microprocessor of Intel, operating system of Microsoft Windows or video game console of Nintendo Switch and Sony PlayStation is a type of platform called “industry platform,” that is a foundation upon which an array of firms can develop complementary products, technologies or services (Gawer, 2009). “Industry platforms” are highly competitive business model since their value can be leveraged by external innovation of complementary products or services, referred as “platform leadership” (Cusumano and Gawer, 2002).