Nowadays, there is a commonly used view among economists and policy makers that competition among platforms and open-source software are intrinsically more desired for social efficiency in comparison to closed-source software. This belief relies on the intuition that free and open access to a platform can only improve social welfare. Although open-source software is getting more and more important, studies have shown that also the monopolistic / closed-source software often desirable is. The price is not the only factor when choosing a particular software. (Gawer, 2002)
At first glance, it seems that open-source software brings more benefits as it is usually cheaper than closed-source software. Moreover, providing an open platform can be profitable as it allows third-party applications to raise the overall value of the platform. Companies with an open platform can profit from selling those rights to develop applications or it could subsidize developers to increase the platform value. However, opening the platform results in a more aggressive pricing strategy for the rivals. Consequently, companies might prefer to keep their platforms closed regardless of the fact that an open platform would be more valuable to consumers. (Economidus, 2006)
Closed-source software is generally built with the end-users in mind which means the technology is often easy to use. Consequently, no special technical knowledge is required. Therefore, closed source software is regularly the preferred choice for firms because of this fact and the fact that their employees do not need extensive training to adapt to the technology. Furthermore, many firms understand that closed-source software is far more secure and reliable compared to open source coding (Gawer, 2002). As closed-source software cannot be altered, it is considerable less vulnerable to cyber attacks for example. Moreover, service and support are great advantages when using closed software. Ongoing support is one of the important selling points for consumers that have little technical skills as it is one of the main reasons why those people choose closed source software over open source software. (Economidus, 2006)
References:
Gawer, A. & M. A. Cusumano, (2002). Platform Leadership: How Intel, Microsoft, and Cisco Drive Industry Innovation, Harvard Business School: Boston, MA. Retrieved 23 September 2018
Economidus, N, (2006). Two-Sided Competition of Proprietary vs. Open Source Technology Platforms and the Implications for the Software Industry. Retrieved 23 September 2018, from https://www.researchgate.net/publication/5198078_Two-Sided_Competition_of_Proprietary_vs_Open_Source_Technology_Platforms_and_the_Implications_for_the_Software_Industry
