Updating at the expense of demand? The case of platform apps

Information Systems and e-Business Management

Abstract

Abstract For short-lifecycle products, online reviews of earlier versions become less informative. In response, digital platforms hosting these products adopt governance mechanisms that keep reviews timely and aligned with the current versions. In the mobile app context, one such mechanism conceals prior reviews whenever an app is updated and excludes them when deriving review-based measures of reputation. The concern is that by increasing search frictions, the mechanism may depress demand for some apps but not others. In this paper, we investigate how this concealing governance mechanism influences app demand. Using an instrumental variable approach, our results reveal asymmetrical impacts. We find that top-ranked free “superstar apps” tend to benefit from updating. Paid “non-superstar apps” are negatively impacted and the effect is primarily driven by higher-priced apps, while free ones only suffer if their prior review-based reputation was high. Our findings highlight how a platform governance mechanism results in redistributing demand. They also offer platforms and developers guidance on the implications of review-concealing policies.

Authors 4

1. Wael Jabr

   Pennsylvania State University

   Affiliation as printed

   Pennsylvania State University, State College, USA

2. Dominik Gutt Aachen School of Business and Economics

   RWTH Aachen University

   Affiliation as printed

   School of Business and Economics, RWTH Aachen University, Aachen, Germany

3. Juergen Neumann

   Paderborn University

   Affiliation as printed

   Faculty of Business Administration and Economcis, Paderborn University, Paderborn, Germany

4. Dennis Kundisch corresponding

   Paderborn University

   Affiliation as printed

   Faculty of Business Administration and Economcis, Paderborn University, Paderborn, Germany