Abstract
Millions of entrepreneurial firms operate on digital platforms and form mutually dependent relations with platform owners. Despite the values these platforms create, they are characterized by excessive power asymmetries between platform owners and firms operating on these platforms. Scholars are beginning to examine the forms and consequences of these asymmetries on transaction-based platforms such as Amazon and Uber. However, we know little about power dynamics, particularly on innovation-based platforms, wherein entrepreneurial firms’ practices and relationships with platform owners are fundamentally different than those of sellers and service providers in transaction-based platforms. In this paper, we explore how these entrepreneurial firms perceive and respond to their dependence on digital platforms through a sensemaking process. We examine these dynamics within the context of Apple's iOS App Store, obtaining data from news media and interviews with top executives of top-selling app developers. Our initial findings highlight the complex power dynamics between these firms and Apple, enhancing our understanding of how power imbalances in digital platforms affect the innovation and growth strategies of platform-dependent entrepreneurial firms.