In economics, vendor lock-in, also known as proprietary lock-in, lock-in, or the Pottersville pattern, is a situation in which a customer is so dependent on a vendor for product and services that he or she cannot move to another vendor without substantial switching costs, real and/or perceived.
These costs to the customer create a situation which favors the vendor at the expense of the consumer. Monopolies tend to result when lock-in costs create market barriers to entry, which may result in antitrust actions from the relevant authorities.
Vendor lock-in is often used in the computer industry to describe the effects of a lack of compatibility between different systems.
- Microsoft software carries a high level of vendor lock-in, based on its extensive set of proprietary APIs - the WINE projects tries to solve this problem
- Apple Computers, Inc. use their popular iPod music device to promote their own iTunes Music Store and Quicktime file format by locking out alternatives.
- Vendors of office suites use closed file formats so that a whole group of users who want to share files have to buy the same product. - See OpenDocument
Avoiding vendor lock-in
In the 1980s and 1990s, public, royalty-free standards were hailed as the best solution to vendor lock-in. The weakness of such standards was that if one software vendor achieved a dominant market share, "embrace, extend, and extinguish" (EEE) tactics could be used to render the standard obsolete.
Since the late nineties, the use of free/open source software (FOSS) has been pushed as a stronger solution. Because FOSS software can be modified and distributed by anyone, the availability of functionality cannot tie a user to one distributor. Also, FOSS tends to adhere faithfully to standards. The ineffectiveness of distributor lock-in means there's no incentive for FOSS developers to invent new data formats if usable (royalty-free) standards exist.
In particular, copylefted FOSS is particularly resistant to the above mentioned "EEE" tactics since anyone distributing modified versions cannot legally prevent free or competing redistribution of the modifications and their source code.
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