Improving Competitiveness by Empowering User Choice? Removability of Pre-installed Apple Apps and the Implications for Third-party Apps

Abstract

Many platform owners directly compete with third-party platform participants by providing their own, first-party products on the platform. This practice is increasingly contested. While first-party products provide value to many users, third-party products are often ill-positioned to compete with first-party ones as the platform owner can self-preference their products through default setting, for instance by pre-installing them. Platform owners and even regulators have considered a variety of more and less radical interventions to address this concern; however, the potential efficacy of many of these interventions remains unclear. This study focuses on one such intervention, namely making first-party products that are pre-installed removable by users. Empirically, we analyze Apple's 2016 voluntary decision to enable the removal of a subset of its own pre-installed iOS apps, creating a natural experiment. Our difference-in-difference analyses reveal a significant increase, following the introduction of the removal option, in both downloads and usage for third-party apps competing with removable Apple apps relative to third-party apps competing with Apple apps that remained non-removable. Additional analyses suggest that the removal option likely prompted users to experiment with third-party app alternatives for pre-installed Apple apps. Overall, our study suggests that a removability option for first-party products can favorably affect user behavior and may help promote greater competition in platform markets while preserving the value that pre-installed products provide to certain users. Our study holds implications for the platform literature as well as for platform regulation.