Conditions favouring the introduction of positive switching costs for adopters of abstract compatibility standards

Abstract

Research shows vendors manipulate open standards to introduce positive switching costs for product users. This article explores the possibility of manipulating abstract vertical compatibility standards based on the eXtensible Markup Language (XML) to create switching costs for adopters. Vertical standards formalise business processes and data formats unique to specific industries. Manipulating vertical standards does not optimise or enhance proprietary hardware capabilities since vertical standards are not embedded in physical products, and any manipulation is easily detected and quite correctable, so it is unclear whether positive switching costs can be introduced by any supplier. This paper describes why vertical standards are not immune to manipulation, and explores some conditions which may make the manipulation of purely abstract compatibility standards possible. A series of testable propositions are presented, and evidence that shows asymmetries exist to permit the introduction of positive switching costs is discussed. Further research in this area is discussed.