Giant tech companies actually win when their users start using their competitors’ services too.
SSRN · March 18, 2026 · 6431919
The Takeaway
While we usually think dominant platforms want total 'lock-in,' this model shows that 'multihoming' (using two services at once) actually helps the incumbent more than the challenger. It allows the giant platform to keep users from leaving entirely while charging higher prices to the other side of the market.
From the abstract
In our model an incumbent two-sided platform competes against a new entrant. Users already affiliated with the incumbent platform incur different levels of locked-in cost upon switching to the entrant platform. However, these costs can be reduced by keeping the affiliation with the incumbent platform (multihoming). It is the incumbent, rather than the entrant, that benefits the most from multihoming. Indeed, partial multihoming can only arise when the incumbent subsidizes membership retention on