Strategic Drivers of Core Expansion on Software Platforms: Evidence from Apple iOS

Software platforms rely on a core-periphery structure; platform owners provide foundational code that third-party developers extend with complementary software. This structure creates strong incentives for platform owners to cooperate with third-party developers. Yet, platform firms, like Apple, intermittently expand their core by integrating peripheral functionality—for instance, flashlight or screen-time tracking in iOS. If ecosystems thrive on cooperation, why do platform owners expand into niches at the apparent expense of developers? Using a comprehensive data set of all Apple iOS core expansions from 2012 to 2020, we find that expansions systematically target underperforming niches—those with low user satisfaction, limited innovation activity, and high market concentration. Stand-alone apps tend to occur in niches with low innovation, whereas integrated core features focus on niches with low user satisfaction and high concentration. For policymakers, these insights inform regulatory discussions on platform power and the design of public interventions. For platform owners and third-party developers, the findings highlight characteristics of ecosystem niches that are vulnerable to core expansion, supporting strategic decisions regarding cooperation, competition, and innovation investment. By linking niche characteristics to core expansion strategies, this study provides actionable guidance for regulating and managing evolving platform ecosystems.