Business & Information Systems Engineering

Document Type

Research Paper


Cloud services providers practice security-induced lock-in when employing cryptography and tamper-resistance to limit the portability and interoperability of users’ data and applications. Moreover, security-induced lock-in and users’ anti-lock-in strategies intersect within the context of platform competition. When users deploy anti-lock in strategies, such as using a hybrid cloud, a leader–follower pricing framework increases profits for cloud services providers relative to Nash equilibrium prices. This creates a second-mover advantage, as the follower’s increase in profits exceeds that of the leader owing to the potential for price undercutting. By contrast, introducing or enhancing security-induced lock-in creates both an increase in profits and a first-mover advantage. Cloud services providers therefore favor security-induced lock-in over price leadership. More broadly, we show why standardization of semantics, technologies, and interfaces is a nonstarter for cloud services providers.