In a wide range of industries, policymakers have considered encouraging or mandating data interoperability to facilitate more entrants and promote competition and innovation. However, some incumbents in these industries argue that interoperability would entrench existing technological design and stifle innovation.
In this paper, we attempt to better understand the relationship between interoperability and innovation by looking at the case study of podcasting and the innovation that has emerged across its ecosystem. We analyze nine podcasting apps, six podcast hosting services, and five podcast directories to catalog the novel features each offers. We then organize those features, from those that best facilitate the movement of data between systems (interoperable) to those that most impede that movement (anti-interoperable).
Our analysis reveals a bifurcated ecosystem: one of smaller apps and services that leverage or improve on interoperable systems and another of larger platforms that attempt to offer paradigm-shifting innovations, but that to some extent also undermine interoperability and externalize certain costs to users. We conclude that in designing competition policy, policymakers should not focus on whether interoperability encourages or discourages innovation, but on what kind of innovation it introduces, and how interoperability might impact all relevant stakeholders.
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