Platform mergers and antitrust

This paper sets out a framework for addressing competition concerns arising from acquisitions in big platform ecosystems. This is a June 2021 update

Publishing date: 15 June 2021
Authors: Georgios Petropoulos Marshall Van Alstyne Geoffrey Parker

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This is an updated version of the Working Paper: Platform mergers and antitrust published by Bruegel in January 2021.

Platform ecosystems rely on economies of scale, data-driven economies of scope, high quality algorithmic systems, and strong network effects that frequently promote winner-takes-most markets. Some platform firms have grown rapidly and their merger and acquisition strategies have been very important factors in their growth. Big platforms’ market dominance has generated competition concerns that are difficult to assess with current merger policy tools. We examine the acquisition strategies of the five major US firms—Google, Amazon, Facebook, Apple and Microsoft—since their inception. We discuss the main merger and acquisition theories of harm that can restrict market competition and reduce consumer welfare. To address competition concerns about acquisitions in big platform ecosystems we develop a four step proposal that incorporates: (1) a new ex-ante regulatory framework, (2) an update of the conditions under which the notification of mergers should be compulsory and the burden of proof should be reversed, (3) differential regulatory priorities in investigating horizontal versus vertical acquisitions, and (4) an update of competition enforcement tools to increase visibility into market data and trends.

We are very thankful to Aidai Kozubekova and Nicole Evans for their superb research assistance. The paper benefitted greatly from discussions with Erik Brynjolfsson, Luis Cabral, Avinash Collis, Maria Demertzis, Nestor Duch-Brown, Justus Haucap, Bertin Martens, Maciej Sobolewski, Tommaso Valletti and Guntram Wolff, as well as seminar participants at Bruegel. Georgios Petropoulos gratefully acknowledges financial support from the European Union’s Horizon 2020 research and innovation programme under the Marie Skłodowska-Curie grant agreement No. 799093. Finally, we gratefully acknowledge editorial assistance from Elizabeth Parker.

Recommended citation:

Parker, G., G. Petropoulos and M. Van Alstyne (2021) ‘Platform mergers and antitrust, Working Paper 01/2021, Bruegel

About the authors

Georgios Petropoulos

Georgios Petropoulos joined Bruegel as a visiting fellow in November 2015 and was a resident fellow from April 2016 to February 2022. Since March 2022, he was a non-resident fellow. He is Research Associate at MIT, Digital Fellow at Stanford University and CESifo Network affiliate. Georgios’ research focuses on the implications of digital technologies on innovation, competition policy and labour markets. He is currently studying how digital platforms should be regulated, what the relationship between big data and market competition is, as well as how the adoption of robots and information technologies affect labour markets, employment and wages. He holds a Bachelor’s degree in Physics, Master’s degrees in mathematical economics and econometrics and a PhD degree in Economics. He has also studied Astrophysics at a Master's level.
Marshall Van Alstyne

Marshall Van Alstyne is one of the world’s foremost experts on platform strategies and network business models. He is a frequent speaker, board level advisor, and consultant to both startups and global firms.
His research has received numerous academic awards and appeared in top journals such as Science, Nature, and Harvard Business Review. Interviews appear regularly across Bloomberg, the New York Times, the Wall Street Journal and National Public Radio. Prof. Van Alstyne is a research scientist at MIT, tenured professor at Boston University, and graduate of Yale and MIT. His consulting includes such firms as British Telecom, Cisco, Haier, IBM, Intel, Microsoft, Pearson, and SAP. He holds multiple patents; and was among the first to measure individual dollar output from social networks and IT. His coauthored work, with Geoffrey Parker, of two-sided markets and platforms as inverted firms are now taught and applied worldwide.
Geoffrey Parker

Geoffrey Parker is a professor of engineering at Dartmouth College where he also serves as Director of the Master of Engineering Management Program. In addition, he is a research fellow at MIT’s Initiative for the Digital Economy where he leads platform industry research studies and co-chairs the annual MIT Platform Strategy Summit. Prior to joining Dartmouth, Parker was a professor of business at Tulane University. He received a B.S.E. from Princeton and M.S. and Ph.D. from MIT. Parker has made significant contributions to the field of network economics and strategy as co-developer of the theory of “two-sided” markets. He is co-author of the book “Platform Revolution.” His current research includes studies of platform business strategy, data governance, smart cities and energy systems, financial services, and electronic healthcare record systems. Parker’s research has been funded by grants from the National Science Foundation, the Department of Energy, the states of Louisiana and New York, and numerous corporations. He serves or has served as department editor and associate editor at multiple journals and as a National Science Foundation panelist. Parker won the Thinkers50 2019 Digital Thinking Award, along with Marshall Van Alstyne, for the concepts of the inverted firm, two-sided markets, and how firms can adapt and thrive in a platform economy. Parker is a frequent keynote speaker and advises senior leaders on their organizations’ platform strategies. Before attending MIT, he held positions in engineering and finance at GE Semiconductor and GE Healthcare. Additional information can be found at ggparker.net, @g2parker, and Google Scholar.