Third-Party Developers' Adoption of Platform APIs and Their Continued New App Development: A Competing Risk Analysis

Abstract

In this study, we theorize and empirically investigate how third-party developers’ adoption of platform APIs may influence their likelihood to continue develop new applications for software platform. We use the data about a major web browser platform and our analysis incorporates the consideration of following issues: 1) the interdependence between different development choices of third-party developers (updating existing apps, within-category new app development, and cross-category new app development); 2) different types of APIs (high-level APIs and low-level APIs) based on the level of abstraction, modularization, and development standardization; and 3) the competitive environment faced by third-party developers. We develop a joint frailty model to capture different development activities and perform a competing risk analysis to assess the influences of API adoption by developers. Our results show that the adoption of platform APIs increases the likelihood for third-party developers to build new apps both in their existing app categories and in new categories. The adoption of high-level APIs generates a weaker effect than the adoption of low-level APIs in fostering new app development. We also find that the positive effect of high-level API adoption on cross-category new app development becomes stronger in more competitive environment, and that on within-category new app development becomes weaker in more competitive environment.

Keywords: Software Platform, Application Programming Interface, Third-party Application, Application Development, Competing Risk Analysis