Exploiting Others’ Investments in Open Standards

This article is concerned with “unilateral” de facto standards that arise from later entrants adopting products or technologies employed by an established player. Unilateral de facto standards are susceptible to certain forms of abuse because they lack the formal safeguards of de jure standards or the market constraints that limit the winners of standards wars. In particular, the original developer of a technology that becomes a unilateral de facto standard can employ an “open early, closed late” strategy to induce industry reliance on the technology and then later exploit that reliance to create lock-in and exclude rivals.