Platform Design and Innovation Incentives: Evidence from the Product Rating System on Apple's App Store

I study how the aggregation of product ratings on digital platforms affects the strategic behavior of third-party firms. I leverage an unexpected and exogenous change in the rating system on Apple’s App Store marketplace to show that for nearly a decade, the manner in which the App Store aggregated customer ratings led to less frequent product updating by developers. I show that products that were more reliant on the rating system were more responsive to the incentives created by this policy, and I provide suggestive evidence that this policy led to a decrease in developer effort on the platform.