Management Science · 2022
How APIs Create Growth by Inverting the Firm
Documents growth gains from API adoption and platform openness, while quantifying associated governance and security tradeoffs.
Expert Witness Practice Area
Antitrust & Digital Markets Expert Witness
Antitrust disputes in digital markets turn on whether a platform's design and access decisions foreclosed competition or simply reflected it. Jonathan Hersh, PhD is an economist who analyzes API access restrictions, interoperability, self-preferencing, and platform foreclosure — with peer-reviewed research in Management Science on how APIs restructure firm boundaries and growth.
What these cases turn on
- Did the access restriction foreclose rivals, or reflect ordinary product design?
- What is the relevant market when the product is an interface rather than a good?
- How dependent were complementors on the platform, and what alternatives existed?
- What happened to downstream entry, pricing, and output after the conduct?
- Can the claimed efficiency justification be tested against the data?
Analysis
API and interoperability disputes are hard because the conduct at issue is usually indistinguishable, on its face, from ordinary product management. Rate limits, deprecations, and tier changes are routine engineering decisions that can also foreclose a rival. Separating the two requires looking at what actually happened to dependent firms afterward, not at the stated rationale.
What the research contributes
My work in Management Science on how APIs create growth by inverting the firm studies how programmatic interfaces move activity across firm boundaries and what that does to growth for both the platform and the firms building on it. That gives a structural account of platform-complementor dependence — the relationship at the center of most access disputes — grounded in data rather than in analogy to physical bottlenecks.
Where these cases are won and lost
- Market definition, when the product is an interface rather than a thing.
- Whether the foreclosure theory has a testable prediction, or only a narrative.
- Whether the efficiency justification was contemporaneous or constructed for litigation.
- Whether observed harm to a complementor reflects foreclosure or its own competitive position.
Methods applied
- Analysis of platform and complementor dependence using developer and usage data
- Competitive-effects analysis of access, pricing, and interoperability changes
- Event-study and difference-in-differences estimation around policy changes
- Market definition analysis for interface and platform products
- Testing efficiency justifications against observed outcomes
Peer-reviewed research grounding this work
Published, citable research in this area — the verifiable basis for the analysis above.
Frequently asked questions
What antitrust matters do you take?
Digital-market matters where the economics are technical: API access and termination, interoperability restrictions, self-preferencing, tying in software ecosystems, and platform foreclosure theories. I work for plaintiffs and defendants.
How do you distinguish foreclosure from ordinary product design?
By examining outcomes rather than intent. Foreclosure has testable implications for complementor entry, exit, pricing, and output. If a theory of harm makes no prediction that could fail against the data, it is a narrative rather than an economic analysis, and it will be treated as one.
Do you have published research in this area?
Yes — 'How APIs Create Growth by Inverting the Firm,' published in Management Science, on how programmatic interfaces reallocate activity across firm boundaries and affect growth for platforms and complementors.
Other practice areas
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