Classroom Companion: Business

10.2.3 
 Competition
Three basic types of competition are identified for MSPs. The platform may com-
pete directly with other platforms offering the same services (e.g., between Facebook 
and Myspace and between electronic newspapers) or compete with entirely different 
 
Chapter 10 · Multisided Platforms

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platforms for certain types of customers. Facebook and Google compete for attract-
ing advertisers to their platform even though the two platforms belong to completely 
different business segments. This type of competition may seem counterintuitive but 
is the most important competitive challenge for several platform operators. Finally, 
there may also be competition between the customers of the same type (e.g., between 
drivers offering services over the Uber platform). This makes competition in the 
MSP business more complex than in most other businesses.
One particularly interesting group competing in the advertisement business is the 
influencers promoting various products on their blogs over social media platforms 
(e.g., Facebook, Instagram, and YouTube). The influencers run two-sided platforms 
(readers and advertiser) on the Internet without owning any kind of infrastructure 
except their own smartphones, tablets, cameras, or personal computers.
10.2.4 
 Business Ecosystem
Because of competition as just explained, the ecosystem for MSPs is more complex 
than other businesses. For this reason, the MSP must sometimes include other 
businesses in their ecosystem analysis that are seemingly unrelated to the primary 
business areas of the platform making the overall business model more complex 
and unpredictable. Because of the complex interactions among the various types 
of customers, the use of standard business modeling tools may not capture all 
strategic issues related to MSPs. Business models often fail to take the effects of 
interactions between user groups (e.g., cross-side network effects) into account but 
rather treat them as independent business segments. One way of characterizing the 
MSP in terms of its ecosystem is considered in 
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Sect. 
10.4
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