Classroom Companion: Business

Multi-sided platform (MSP)
. Fig. 10.7 The trade 
process of multisided 
platforms. (Authors’ own 
figure)
 
Chapter 10 · Multisided Platforms

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10.6 
 Conclusions
The multisided platform (MSP) provides services to two or more user or customer 
groups at the same time. To be an MSP, there must be interactions between the 
groups providing benefits for each user group. The interactions between the groups 
are the cross-side network effects. This gives rise to complex business ecosystems 
consisting of several types of stakeholders and the numerous interactions between 
them. This makes the analysis of MSPs considerably more complex than busi-
nesses offering services to a homogenous group of customers.
Most businesses in the digital economy are multisided platforms. Therefore, the 
understanding of how interactions take place in these platforms is essential in the 
analysis of price formation within each individual user group, how the platform 
configuration generates revenues, and how competition takes place in the MSP 
market. Competition is particularly challenging since competition may take place 
not only between similar platforms but also with platforms in different business 
segments, for example, Facebook and Google compete for attracting advertisers.
Several MSPs offer services for free to some user groups, while other user groups 
pay for the services. This flexibility is one reason for being an MSP. The revenues of 
the MSP are then determined by the strength of the cross-side network effect these 
users impose on the customers paying for the services. In such cases, standard eco-
nomic demand/supply analysis may be meaningless.
Finally, several MSPs are de facto monopolies in one of their business segments 
(e.g., as social medium) while competing in other segments.