APIs, the glue under the hood. Looking for the “API economy”

Abstract

Purpose Some specialized consultancies have been making the case of an “API economy”. This study aims to investigate the issue, marshalling data on the economic dimension, to better understand the environments of APIs. It offers an overview of the functions and definition of application programming interfaces (APIs) in the backdrop of the history of services computing. The paper attempt assessing the economic value (size of the market) of APIs and reviews some of the available metrics. The paper also takes a look some issues and challenges ahead for the deployment of all kind of APIs. Design/methodology/approach The paper is based on desk research and a scientific and grey literature review. However, it relies mostly on specialized consultancies although from a critical viewpoint. The paper provides an historical account of the notions of APIs and API economy. Findings The paper questions the idea of an “API economy” that still stands on the “hype” side and is not clearly substantiated. It reveals that the number of firms with mature API programs remains small and that there is an uneven development across industries (traditional firms are less active than digital natives) and countries (Silicon Valley is leading). It highlights that the domination of IT companies (leaders and pioneers of APIs) raises issue of competition and at some point, may prevent rather than foster innovation. Research limitations/implications There is no robust data about the size of the API market nor about its value. Sources are highly heterogeneous and delimitations not always precise. The standard metrics or indicators are hard to find. Further research would be needed to better document this area. Practical implications The paper reviews some of the expected benefits of the use of APIs as enablers of private or public ecosystems. Social implications The paper delineates some of the economic benefits of the public APIs based on open data. It shows some positive examples of public APIs in the EU. Originality/value There is hardly any mention of the API economy in research literature. Most of the academic literature still stems from engineering department or business-management departments, not department of economics. Consultants would usually focus on the potential of business growth, on how to design an effective API strategy but not on the very economic dimension. The paper attempts providing a synthesis of the available data.