1. Introduction

Innovation ecosystem governance refers to the rules, technical standards, contractual arrangements, platform policies, access conditions, licensing systems, data practices and interoperability mechanisms through which firms coordinate an ecosystem in which multiple businesses develop complementary products or services.

Examples include:

• mobile operating-system ecosystems;
• app stores and developer ecosystems;
• cloud-computing ecosystems;
• semiconductor and chip-design ecosystems;
• digital-payment ecosystems;
• AI and machine-learning ecosystems;
• industrial software ecosystems;
• Internet-of-Things ecosystems;
• digital advertising ecosystems; and
• research, licensing and technology-standard ecosystems.

Competition law becomes important when an ecosystem is governed by a firm possessing substantial market power. Governance can then move beyond legitimate coordination and become a mechanism for excluding competitors, controlling access, raising rivals' costs, restricting interoperability, leveraging dominance into adjacent markets, or suppressing innovation.

The central competition-law question is therefore not whether a company is allowed to govern an ecosystem. It plainly can. The question is whether the governance rules are being used to protect competition or to protect the ecosystem owner's market power.

2. Meaning of Innovation Ecosystem Governance

An innovation ecosystem generally contains several interconnected layers:

1. Core infrastructure – operating systems, cloud infrastructure, networks or semiconductor architecture.
2. Complementary products – applications, devices, software and services.
3. Developers and suppliers – firms dependent upon access to the ecosystem.
4. Users – consumers and business customers.
5. Data infrastructure – information generated by users and ecosystem participants.
6. Standards and protocols – technical rules determining interoperability.
7. Distribution mechanisms – app stores, marketplaces, APIs and other access points.
8. Governance rules – contractual and technical conditions imposed by the ecosystem operator.

An ecosystem may therefore produce substantial efficiencies. A unified technical architecture can reduce transaction costs, encourage investment and facilitate innovation.

However, the same architecture can create structural dependence.

For example:

Operating system → app store → payment system → developer distribution → advertising → user data

If one undertaking controls several connected layers, it may be capable of using power at one layer to restrict competition at another.

3. Why Innovation Ecosystem Governance Creates Antitrust Risks

A. Gatekeeper power

A dominant ecosystem operator may become the principal gateway through which competitors must reach consumers.

Examples include:

• app stores;
• search engines;
• operating systems;
• cloud platforms;
• digital advertising exchanges;
• payment infrastructure; and
• dominant technical standards.

The competition concern arises where competitors cannot realistically bypass the gateway.

B. Access restrictions

A platform may impose:

• technical restrictions;
• licensing conditions;
• API restrictions;
• certification requirements;
• security requirements;
• distribution limitations;
• contractual exclusivity; or
• discriminatory access conditions.

Some restrictions are legitimate.

For example, cybersecurity requirements can protect consumers. Competition law does not require an ecosystem to accept every third-party product.

The issue is whether the restriction is objectively justified, proportionate and competitively neutral, or whether it operates primarily to exclude competing products.

4. Interoperability and Competition

Interoperability is particularly important in ecosystem competition.

Suppose a dominant platform controls an essential interface. If competitors cannot effectively interoperate with the platform, the incumbent may gain an advantage that does not result from superior innovation.

Competition authorities therefore examine:

• API access;
• technical interfaces;
• data portability;
• compatibility;
• messaging interoperability;
• operating-system interoperability;
• payment interoperability; and
• access to technical information.

The classic European case concerning this issue is Microsoft.

5. Microsoft Corp. v. Commission

Case: Microsoft Corp. v Commission, Case T-201/04, General Court, 2007; subsequent EU litigation concerning the Commission decision.

Microsoft possessed a very strong position in PC operating systems.

The European Commission found, among other matters, that Microsoft had improperly restricted access to interoperability information concerning its work-group server operating system.

The competition concern was that Microsoft could use control over the dominant operating system to disadvantage competing server products.

Importance for innovation ecosystems

The case illustrates an important principle:

Control over a technological interface can become a source of downstream competitive power.

The competition issue was not simply the sale of Windows. It concerned Microsoft's ability to determine how other technological products could interact with Windows.

Antitrust lesson

Innovation ecosystems can become anti-competitive where the ecosystem owner:

• controls a critical interface;
• restricts interoperability;
• possesses substantial market power; and
• uses that control to disadvantage competing complementary products.

6. Google Android

Case: European Commission, Google Android, Case AT.40099, 2018.

The Commission found that Google had imposed various contractual restrictions concerning Android devices and applications.

The case involved, among other matters:

• tying of Google Search and Google Play;
• restrictions concerning alternative versions of Android;
• contractual arrangements involving device manufacturers; and
• payments relating to pre-installation.

Ecosystem-governance significance

Android demonstrates how competition law can examine governance rules imposed throughout an ecosystem rather than looking only at a single product market.

The operating system, app store, search service and mobile-device manufacturers formed an interconnected ecosystem.

A restriction affecting one layer could therefore influence competition at another.

Key principle

Competition analysis may need to consider:

core platform → complementary applications → device manufacturers → consumers → competing services.

7. Google Shopping

Case: Google Search (Shopping), Case AT.39740, European Commission decision 2017; General Court judgment in 2021.

The Commission concluded that Google had abused its dominant position in general search by giving more favourable treatment to its own comparison-shopping service in search results.

The General Court substantially upheld the Commission's infringement finding, while the precise legal reasoning concerning the conduct was extensively examined by the courts.

Ecosystem-governance relevance

Google controlled a major gateway to online information.

Its search-ranking infrastructure could therefore influence competition in adjacent markets.

The case illustrates the self-preferencing problem:

An ecosystem operator may control the infrastructure through which competitors reach consumers while simultaneously competing against those same competitors.

Antitrust concern

The conflict of interest is structurally important:

Platform owner = infrastructure provider + market participant + rule setter.

This combination can create substantial competition concerns where the platform's governance decisions favour its own downstream service.

8. Qualcomm

Case: European Commission, Qualcomm (Exclusivity Payments), Case AT.39711, 2018.

The Commission found that Qualcomm had made payments to Apple in circumstances that restricted the use of competing LTE baseband chipsets.

The General Court later annulled the Commission's decision in 2022 because of procedural and analytical deficiencies identified by the Court.

Ecosystem significance

The case nevertheless provides an important example of competition issues arising within a highly interconnected technology ecosystem.

The relevant ecosystem included:

• semiconductor manufacturers;
• smartphone manufacturers;
• telecommunications technology;
• intellectual-property licensing;
• device design; and
• downstream consumer products.

Lesson

Competition authorities must examine whether commercial arrangements within an innovation ecosystem:

• exclude competing suppliers;
• increase switching costs;
• foreclose technologically capable rivals; or
• reduce opportunities for innovation.

At the same time, the Qualcomm litigation demonstrates that competition authorities must establish exclusionary effects through sufficiently rigorous economic and legal analysis.

9. United States v. Microsoft Corp.

Case: United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001).

This is one of the most significant technology-platform antitrust cases.

Microsoft possessed a dominant position in PC operating systems. The litigation concerned Microsoft's conduct toward competing browsers and technologies, particularly Netscape.

The court found various exclusionary practices unlawful under Section 2 of the Sherman Act.

Innovation ecosystem significance

The case illustrates how an incumbent can attempt to protect its technological ecosystem against an emerging complementary technology.

A seemingly adjacent product can become competitively important when it has the potential to change the architecture of the ecosystem.

Important principle

Competition law can intervene where an established platform uses its existing position to prevent an emerging technology from becoming a competitive constraint.

This is particularly relevant today for:

• AI assistants;
• cloud platforms;
• browser ecosystems;
• AI operating layers;
• developer platforms; and
• emerging interoperability technologies.

10. FTC v. Qualcomm

Case: FTC v. Qualcomm Inc., 969 F.3d 974 (9th Cir. 2020).

The Federal Trade Commission alleged that Qualcomm's licensing practices involving cellular standard-essential patents violated U.S. antitrust law.

The Ninth Circuit ultimately reversed the district court's judgment against Qualcomm.

Ecosystem relevance

The case illustrates the difficult relationship between:

• intellectual-property rights;
• standard-essential patents;
• licensing;
• chip markets;
• device manufacturers; and
• technological ecosystems.

An ecosystem participant may simultaneously possess:

1. technology;
2. intellectual-property rights;
3. industry-standard technology; and
4. significant bargaining power.

Competition law must distinguish legitimate returns from innovation from conduct that unlawfully excludes competing firms.

11. Aspen Skiing Co. v. Aspen Highlands Skiing Corp.

Case: Aspen Skiing Co. v. Aspen Highlands Skiing Corp., 472 U.S. 585 (1985).

Although not a digital-platform case, it remains important to the analysis of ecosystem access and refusal-to-deal.

Several ski operators previously participated in a joint ticketing arrangement. Aspen Skiing eventually stopped cooperating with Aspen Highlands.

The U.S. Supreme Court found the conduct capable of constituting unlawful monopolization under Section 2.

Relevance to innovation ecosystems

The case is relevant to situations where a dominant ecosystem operator:

• previously cooperated with rivals;
• derives benefits from interoperability;
• abruptly terminates cooperation; and
• sacrifices an existing commercial relationship in order to disadvantage a competitor.

However, modern refusal-to-deal doctrine in the United States is restrictive, so Aspen Skiing should not be understood as establishing a general duty to cooperate with competitors.

12. MCI Communications Corp. v. AT&T

Case: MCI Communications Corp. v. AT&T, 708 F.2d 1081 (7th Cir. 1983).

The case concerned access to telecommunications infrastructure and AT&T's relationship with a competing telecommunications provider.

The Seventh Circuit developed important considerations concerning refusal to deal and monopolization.

Innovation ecosystem relevance

Telecommunications networks are classic ecosystems:

network infrastructure → interconnection → service providers → customers.

If the infrastructure operator controls access to the network, competition at downstream levels may depend upon reasonable interconnection.

The case therefore has continuing conceptual importance for:

• telecom ecosystems;
• cloud interconnection;
• digital infrastructure;
• payment networks;
• API ecosystems; and
• other infrastructure-based markets.

13. Apple and App Store Ecosystem Governance

A particularly important modern ecosystem question concerns Apple's App Store.

The major litigation in Epic Games, Inc. v. Apple Inc. examined Apple's App Store rules, payment requirements and restrictions affecting developers.

The dispute concerned, among other matters:

• Apple's control over iOS distribution;
• App Store commissions;
• alternative payment mechanisms;
• anti-steering provisions; and
• Apple's contractual relationship with developers.

The litigation illustrates a fundamental ecosystem problem:

A platform can simultaneously operate the infrastructure, establish the rules, control distribution and compete with businesses that depend upon that infrastructure.

This makes platform governance itself a competition-law issue.

14. Competition Law and Ecosystem Self-Preferencing

Self-preferencing occurs when an ecosystem operator gives preferential treatment to its own products or services.

Potential examples include:

• ranking one's own product above rivals;
• preferential access to APIs;
• superior technical integration;
• preferential data access;
• better visibility in marketplaces;
• preferential interoperability;
• lower internal fees; or
• exclusion of rival services.

Self-preferencing is not automatically unlawful.

The legal analysis depends on:

• market power;
• market definition;
• foreclosure;
• effects on competition;
• consumer effects;
• objective justification;
• efficiencies; and
• applicable jurisdictional law.

The Google Shopping litigation is particularly important in understanding this problem.

15. Data Governance and Innovation Ecosystems

Data can become a major competitive resource.

A dominant ecosystem may control:

• user data;
• transaction data;
• behavioural data;
• developer data;
• search data;
• advertising data;
• telemetry;
• location data; and
• interoperability data.

This creates several competition concerns.

Data foreclosure

If rivals cannot access competitively important data, they may be unable to develop comparable products.

Data leveraging

A platform may combine information from multiple ecosystem layers to strengthen its position in another market.

Data advantage

Large-scale data collection can create feedback loops:

more users → more data → better product → more users → more data.

This may contribute to durable entry barriers.

16. APIs and Ecosystem Governance

APIs are increasingly important competition infrastructure.

A dominant firm may control an API through which complementary businesses access functionality.

Potential antitrust problems include:

• discriminatory API access;
• delayed API access;
• degraded API functionality;
• discriminatory pricing;
• arbitrary revocation;
• exclusionary technical standards;
• restrictions on interoperability; and
• preferential access for the platform's own services.

Competition law must distinguish between:

legitimate API security and product-design decisions

and

strategic API restrictions designed to exclude competitors.

17. Standard-Setting and Innovation Ecosystems

Standard-setting organizations can promote innovation by ensuring that products work together.

However, standard-setting can create competition risks when competitors coordinate around standards.

Important concerns include:

• exclusion from standard-setting;
• discriminatory participation;
• manipulation of technical standards;
• exchange of competitively sensitive information;
• standard-essential patent licensing;
• discriminatory licensing;
• collective exclusion; and
• standards designed to disadvantage rival technologies.

Competition law therefore seeks to preserve the benefits of interoperability without allowing standards to become mechanisms of exclusion.

18. Network Effects and Ecosystem Concentration

Innovation ecosystems frequently exhibit network effects.

The value of a platform increases as participation increases.

For example:

More developers → more applications → more consumers → more developers.

This can produce powerful feedback loops.

Network effects are not themselves anti-competitive.

They may instead reflect legitimate consumer benefits.

The concern arises when an incumbent uses network effects together with exclusionary conduct to make entry or expansion unnecessarily difficult.

19. Switching Costs and Ecosystem Lock-In

Ecosystem governance can create substantial switching costs.

Examples include:

• proprietary file formats;
• accumulated user data;
• application purchases;
• developer investments;
• training data;
• technical knowledge;
• contractual commitments;
• hardware compatibility; and
• user familiarity.

A consumer or business may remain inside an ecosystem even where an alternative product is attractive because leaving requires substantial expenditure.

Competition law therefore examines whether switching costs result naturally from innovation or are deliberately increased through exclusionary practices.

20. Innovation Foreclosure

Traditional competition law often examines:

• price;
• output;
• market share; and
• consumer welfare.

Innovation ecosystems require additional attention to innovation competition.

A dominant firm may not immediately increase prices. Instead, it might prevent an emerging technology from developing.

Potential forms include:

• acquisition of emerging competitors;
• blocking interoperability;
• restricting developer access;
• exclusive contracts;
• discriminatory platform rules;
• control of technical standards;
• withholding essential interfaces;
• tying complementary products; and
• restricting access to competitively important data.

The harm may therefore appear as:

less experimentation → fewer alternative technologies → reduced future competition.

21. Ecosystem Governance and Merger Control

Mergers can radically change an innovation ecosystem.

A dominant platform acquiring a complementary technology may gain control over:

• data;
• distribution;
• intellectual property;
• developers;
• users;
• APIs;
• technical standards; or
• future competitive threats.

This is why competition authorities increasingly examine acquisitions involving innovative firms even where the target has relatively low current revenue.

Relevant concerns include:

Killer acquisitions

An incumbent may acquire a developing firm that could otherwise become an important competitive constraint.

Ecosystem extension

The acquisition can allow the acquirer to extend dominance from one layer into another.

Data consolidation

Combining datasets can increase entry barriers.

Interoperability foreclosure

The acquiring company may change the target's technology so that interoperability with competing ecosystems deteriorates.

22. Ecosystem Governance and Tying

Tying occurs when access to one product is conditioned upon obtaining another.

Within digital ecosystems this can involve:

• operating system + search;
• operating system + app store;
• hardware + software;
• cloud + software;
• payment service + marketplace;
• advertising technology + publisher services.

The Microsoft and Google Android cases demonstrate how tying can become particularly significant where the tying product functions as a gateway to an ecosystem.

23. Exclusive Dealing

An ecosystem operator may require manufacturers, developers or distributors to agree to exclusivity.

Examples include:

• exclusive pre-installation;
• exclusive distribution;
• exclusive payment arrangements;
• exclusive cloud services;
• exclusive advertising relationships.

The competitive effect depends upon:

• duration;
• market coverage;
• foreclosure percentage;
• switching possibilities;
• alternative distribution channels; and
• market power.

24. Competition Between Ecosystems

Competition increasingly occurs not merely between individual products but between entire ecosystems.

For example:

Competition authorities therefore increasingly need to consider multi-layer market structures.

25. The Indian Competition-Law Perspective

Under India's Competition Act, 2002, innovation ecosystem governance can implicate several provisions.

Section 3

Section 3 addresses agreements that cause or are likely to cause an appreciable adverse effect on competition.

Relevant conduct may include:

• exclusive agreements;
• tying;
• refusal to deal;
• information exchange;
• collusive arrangements;
• restrictive vertical agreements.

Section 4

Section 4 addresses abuse of dominant position.

Innovation ecosystem disputes may involve:

• discriminatory conditions;
• discriminatory prices;
• limiting technical or scientific development;
• denial of market access;
• leveraging dominance into another market;
• tying;
• unfair conditions; and
• exclusionary conduct.

The concept of leveraging is especially relevant to ecosystem governance.

A company dominant in one technological layer may attempt to use that position to enter or control another layer.

26. CCI and Google's Digital Ecosystem

The Competition Commission of India has examined Google's conduct across several interconnected digital markets, including Android-related conduct and online search/advertising ecosystems.

The Indian cases are significant because they demonstrate that competition analysis may examine:

device manufacturers → operating systems → app stores → search → advertising → users.

This ecosystem approach is increasingly important in digital antitrust.

The CCI's Google Android proceedings are particularly relevant to questions involving:

• mandatory pre-installation;
• tying;
• app distribution;
• alternative operating systems;
• licensing arrangements; and
• competitive access to mobile ecosystems.

27. Innovation Ecosystem Governance and Consumer Welfare

Competition law should distinguish between harmful governance and governance that creates genuine efficiencies.

Platform rules can legitimately serve purposes such as:

• cybersecurity;
• privacy;
• fraud prevention;
• technical reliability;
• intellectual-property protection;
• consumer protection;
• quality control; and
• interoperability.

Consequently, an ecosystem operator should not automatically be required to permit every application, API, payment method or technical modification.

The legal question is whether the restriction is competition-neutral and reasonably connected to a legitimate objective, or whether the objective is being used as a pretext for exclusion.

28. Six Major Antitrust Questions for Innovation Ecosystems

A competition authority examining ecosystem governance can ask:

1. Who controls the gateway?

Does one company control access to consumers, developers or infrastructure?

2. Can participants realistically bypass it?

If not, the governance mechanism may possess greater competitive significance.

3. Does the operator compete with the firms it regulates?

This creates a potential conflict between regulator and competitor.

4. Is access discriminatory?

Are rivals subject to conditions that the platform does not impose upon itself?

5. Does the restriction foreclose innovation?

Could the conduct prevent emerging technologies or competitors from developing?

6. Is there an objective justification?

Can the platform demonstrate legitimate technical, security, privacy or efficiency reasons?

29. Comparative Case-Law Table

30. Relationship Between Innovation and Competition

There is an important distinction between innovation by the ecosystem leader and innovation by ecosystem participants.

A dominant firm may argue:

"Our restrictions protect our ability to innovate."

That argument may be legitimate.

But competition law must also consider whether those restrictions prevent other firms from innovating.

The critical balance is therefore:

Protection of innovation incentives

versus

protection of competitive innovation.

An ecosystem can become less innovative over time if its governance rules prevent alternative technologies from emerging.

31. Emerging AI Ecosystems

The issue becomes particularly important with AI.

An AI ecosystem may involve:

chips → cloud infrastructure → foundation models → APIs → applications → data → distribution.

A single company may participate at several levels.

This creates potential concerns involving:

• preferential cloud access;
• exclusive AI partnerships;
• discriminatory API access;
• tying AI models to cloud services;
• access to training data;
• interoperability;
• model portability;
• acquisition of AI startups;
• exclusive distribution;
• compute concentration; and
• vertical integration.

Competition authorities may therefore need to analyse ecosystem dependencies rather than isolated AI products.