Platforms, APIs, and Ecosystem Moats: Designing extensibility so partners (and customers) build value you couldn’t alone
“A platform is when the economic value of everyone that uses it exceeds the value of the company that creates it.” — attributed to Bill Gates. (Harvard Business Review)
If you want a single, durable moat in software, build something that lets other people build. Platforms turn your product from a finite roadmap into an infinite one by inviting partners—and often your most inventive customers—to extend it in ways you would never prioritize (or imagine). In the process, they convert your distribution, data models, and primitives into shared infrastructure for a much larger economy.
Harvard Business Review’s classic framing is still the cleanest: “Platform businesses bring together producers and consumers in high‑value exchanges,” and their chief assets are information and interactions. (MIT Initiative on the Digital Economy)
Why extensibility becomes a moat
The empirical story is clear. When your product becomes a venue where others can transact, integrate, and build, compounding demand‑side scale kicks in.
The App Store economy: Apple reports the App Store ecosystem facilitated $1.3 trillion in billings and sales in 2024, with “more than 90%” of that commerce incurring no commission to Apple. That’s the gravity well of a platform: value creation at a magnitude no single firm could ship alone. (Apple)
API-first payments: Stripe users collectively processed over $1 trillion in 2023—roughly 1% of global GDP—which only happens because thousands of other products embed Stripe’s primitives via APIs, then take it places Stripe never would. (Stripe)
Developer marketplaces: Atlassian’s Marketplace surpassed $4 billion in lifetime app sales by early 2024, with each new, high‑quality extension making Jira, Confluence, and friends more valuable to the next customer. (Atlassian)
Commerce partners at scale: Shopify says merchants now have 16,000+ apps to choose from and that it paid developers more than $1B last year—proof that incentives, not just interfaces, drive vibrant ecosystems. (Shopify)
Integration networks: Zapier’s developer platform promotes nearly 8,000 integrations—evidence that a broad connector layer can turn many point solutions into a de facto platform. (Zapier)
Open‑source gravity: Even outside commercial app stores, platform energy compounds. WordPress’s official plugins team reported plugin submissions nearly doubling (+87%) year over year in 2025, a proxy for the continued vitality of its extension economy. (Make WordPress)
What separates these winners isn’t just product quality—it’s the deliberate design of extensibility and governance that enables multi‑sided network effects. HBR calls it the shift “from internal optimization to external interaction” and from customer value to ecosystem value. (MIT Initiative on the Digital Economy)
Design the platform surface: five extensibility layers
Think of your platform as a ladder others climb. Each rung is an extensibility primitive.
Domain model & identifiers
Design stable, portable IDs for core objects (customers, orders, assets), document relationships, and commit to evolution without breaking changes. This is the substrate for everything that follows.Programmatic APIs (REST/GraphQL/gRPC)
Don’t expose “endpoints”—expose capabilities. Keep nouns and verbs consistent, provide robust filtering/pagination, and publish schema contracts. The cultural bar was set more than two decades ago. As Steve Yegge summarized Jeff Bezos’s internal mandate at Amazon: “All teams will henceforth expose their data and functionality through service interfaces,” and those interfaces “must be designed from the ground up to be externalizable.” Keep your teams honest with that test. (Gist)Eventing & webhooks
Partners need when as much as what. Event streams and webhooks (with retries, signing, and idempotency) let others react in real time and compose workflows without polling.UI extension points
Beyond data exchange, let developers add UI: embedded panels, action buttons, slash commands, context menus, custom fields. Carefully design where third‑party UI is allowed, how it’s themed, and how permissions are enforced.Distribution & discovery
APIs without discovery don’t scale. Think app directories, in‑product marketplaces, and a clean install flow with OAuth scopes and clear consent. Shopify’s App Store, for example, codifies quality with a 100‑checkpoint reviewbefore listing—governance that pays dividends in user trust. (Shopify App Store)
Developer experience is your growth engine
A platform with friction is a platform without flywheel. Treat DX as product‑market fit for developers:
Documentation that teaches: runnable examples, copy‑paste snippets, and “Hello, World” in 5 minutes or less.
SDKs + CLIs: first‑party SDKs for major languages and a CLI to generate scaffolding, run emulators, and test webhooks locally.
Real sandboxes: production‑like data, seeded objects, and replayable events.
Reliability SLOs: publish rate limits, error taxonomies, and incident comms.
Versioning: explicit deprecation windows; never break old clients silently.
Event guarantees: retries with exponential backoff, dead‑letter queues, idempotency keys.
Security baseline: OAuth2/OIDC, fine‑grained scopes, HMAC‑signed webhooks, audit logs, and a clear vulnerability‑reporting path.
Amazon discovered the hard operational lessons early (quotas, monitoring, service discovery) precisely because platformization forces you to industrialize internal interfaces. Learn from that playbook instead of re‑writing it. (Gist)
Incentives and governance: the hard parts that create the moat
A marketplace is an economic system, not just a menu of apps. Setting the rules—and aligning incentives—turns your surface area into a defensible moat.
1) Share the upside.
You rarely get a thriving ecosystem without a healthy partner P&L. Shopify’s partner message is explicit: $1B+ paid to developers last year, 16,000+ apps, and updated revenue share rules. In 2025 it shifted its pandemic‑era $1M annualexemption to a lifetime threshold, leaving a 15% rev share above that line—controversial for some developers but transparent in its intent to fund platform investment. (Shopify)
Atlassian, for its part, announced 0% revenue share up to $1M lifetime for eligible Forge apps starting 2026—another example of using structure to stimulate early ecosystem growth. (Atlassian)
2) Curate quality and safety.
Openness is not a license for spam or risk. Google drastically tightened Play Store policies, removing roughly half of listed apps since early 2024 to improve quality and safety; the total dropped from ~3.4 million to ~1.8 million, with millions of policy‑violating apps blocked. That is painful short‑term pruning in service of a healthier garden. (The Verge)
Security matters, too. In 2025, a critical vulnerability in a popular WordPress plugin left an estimated 160,000 sites at risk until patched—reminding every platform owner to invest in reviews, automated scanning, and fast update channels. (TechRadar)
3) Respect regulation and design for contestability.
The EU’s Digital Markets Act (DMA) codifies obligations for “gatekeepers” to enable fairer, more open markets—including app distribution and developer steering rights. Apple responded with 600+ new APIs, alternative browser engines, and options for alternative app distribution and web distribution in the EU (iOS 17.4+ / 17.5+). Whatever your view, this is a reminder: platform rules are now a board‑level topic, not just a policy page. (European Commission)
4) Avoid platform risk (and the stigma of “sherlocking”).
Publish a clear Platform Stability Policy: how you treat overlapping first‑party features, how you notify partners, how long third‑party distribution channels remain available, and what your non‑goals are. The goal is not to promise inaction, but to build predictable expectations so external innovators can confidently invest.
What to measure (so you know the moat is forming)
Platforms stagnate when they measure only core product KPIs. Add ecosystem metrics that capture compounding effects:
Attachment: % of customers with ≥1 third‑party integration; median # of installed apps per customer; cohort retention uplift for integrated vs. non‑integrated accounts.
Ecosystem GMV: third‑party billings/sales attributable to your platform (direct or facilitated)—Apple’s trillion‑dollar figure is the archetype. (Apple)
Developer health: time‑to‑first‑call (TTFC), time‑to‑first‑event (TTFE), SDK adoption, sandbox reliability, developer NPS.
Marketplace vitality: app install velocity, active developer accounts, partner revenue growth, share of support tickets resolved by partners.
Quality & safety: approval times, % apps meeting “gold” quality bars, event delivery SLOs, security incident MTTR, % of webhook deliveries succeeding without retry.
Governance trust: deprecation SLA adherence, public roadmap hits, partner satisfaction with reviews and comms.
A practical platform playbook (sequence matters)
Phase 0 — Internal platformization (0–1 quarter).
Pick 1–2 critical domains and force service‑first design internally. Document the contract, expose it to another team first, and treat them like an external developer.
Ship versioning and auth from day one; don’t “bolt on” security later.
Phase 1 — Externalize APIs + events (next quarter).
Publish stable REST/GraphQL endpoints + webhooks for 3–5 high‑value use cases.
Provide SDKs (JS/Python) and a public Postman collection.
Stand up a developer portal with quickstarts, sandbox sign‑up, and an incident status page.
Phase 2 — UI extensions + marketplace (quarters 3–4).
Introduce 2–3 carefully designed UI extension points (e.g., contextual side panel, inline action menu, custom field).
Launch a lightweight app directory with verified partners and an install flow (OAuth, scopes, consent).
Establish a partner review rubric (quality, security, performance) and an explicit co‑marketing path for top apps.
Phase 3 — Incentives + co‑selling (12+ months).
Roll out a transparent revenue share and payouts pipeline once monetization emerges (learn from Shopify’s and Atlassian’s experiments). (Shopify)
Add technical certification, solution bundles, and lead‑sharing to help partners scale.
Create “permissionless” lanes (no review) for safe classes of extensions to reduce friction and increase surface‑area experimentation—an idea HBR highlights as a catalyst for platform innovation. (MIT Initiative on the Digital Economy)
Common failure modes—and how to avoid them
APIs treated as exhaust, not product. If your docs read like internal notes, developers will treat you like an integration chore. Assign PM ownership, publish a versioning policy, and ship roadmap updates for developers just as you do for users.
Eventing without guarantees. Unreliable webhooks are the fastest path to ecosystem churn. Deliver signing, retries, idempotency, and tooling to replay events from day one.
No governance teeth. If your marketplace lets anything through, your brand absorbs the support burden and security risk. Borrow from Shopify’s “100‑checkpoint review” mindset and Google’s willingness to prune low‑quality apps when needed. (Shopify App Store)
Misaligned partner economics. Partners do the math. If they can’t build a healthy business, they won’t build your missing features. That’s why public figures like $1B annual developer payouts (Shopify) or $4B lifetime marketplace sales (Atlassian) matter—they signal a path to real outcomes. (Shopify)
Regulatory blind spots. Rules shape moats. The DMA is already forcing deep changes (e.g., Apple’s 600+ new APIs and EU app distribution options). Track these winds and design accordingly. (Apple)
Conclusion
As HBR puts it, the core unit of value in platforms is the interaction—not the product feature. Your moat grows when you remove friction from those interactions and share rewards fairly. (MIT Initiative on the Digital Economy)
Build the primitives. Invite others to build on them. Protect users with strong governance. Share the upside so partners can hire, reinvest, and invent. Do this well and, to remix the Gates line, the economic value created around your platform will dwarf what you could have created alone—and that is precisely the point.
And if you need motivation, remember that even Amazon had to transform itself to get here. “All teams will henceforth expose their data and functionality through service interfaces.” That sentence launched AWS‑era Amazon and a generation of platform thinking. Let it launch yours. (Gist)