Digital platforms are often governed by a centralized organization that acts as the orchestrators and has significant power over complementors or users, which creates the risk that this power may be misused. An alternative governance model are decentralized platforms, where the orchestrator consists of a decentralized organization where ownership and decision-making are distributed among multiple actors. In this paper, we study how a decrease in trust in centralized platforms affects the extent to which users transact on these two types of platforms. Using the collapse of a centralized platform for digital currency exchange as an exogenous shock, we find that users increasingly transact on decentralized platforms as a reaction to an erosion of trust in centralized platforms. The magnitude of this effect varies depending on whether long-term relationships with the platform have been established in the past. Our findings contribute to the literature on platform governance by shedding light on how different types of orchestrator governance can affect platform usage.
