Institutional Change on Digital Platforms: Temporal Shifts in the Power of Users, Businesses, and States

Under what conditions are user-generated digital content platforms responsive to pressures from users, businesses, and states? I propose that digital platforms show different levels of responsiveness to users, businesses, and states over time. Early in a platform’s life, the platform is highly sensitive to the demands of users, who have an opportunity to directly shape the institutional characteristics of the platform through the threat of user revolt. The unique power of its users stems from the network logic that underpins the value of the platform. As a platform grows and the size and centrality of its network increase, it becomes more sensitive to pressures by businesses (through boycotts) and the state (through regulation). At the same time, the power of users lessens as collective action problems become more severe and exit threats become less credible. The threat of user revolts has a temporal significance: Unless users alter the institutional architecture of the platform and lock in pro-user institutional characteristics early, the threat of user revolts becomes less consequential as the platform grows. Comparative case studies of Facebook, Wikipedia, Digg, and Reddit provide support for the theory.