Free DP Download 31 January 2020 - COMPETITIVE EFFECTS OF BIG TECH MERGERS AND IMPLICATIONS FOR REGULATION
COMPETITIVE EFFECTS OF BIG TECH MERGERS AND IMPLICATIONS FOR REGULATION
Massimo Motta, Martin Peitz
CEPR DP No. 14353 | 26 January 2020
Big tech mergers are frequently occurring events, yet largely go unregulated. A new CEPR study by Massimo Motta and Martin Peitz assesses the competitive effects of these mergers and finds that merger control, while imperfect, could enable necessary restraint to avoid problems that are likely to arise from big tech firms expanding their growing sphere of control. Among the findings:
- Big tech mergers may well have adverse competitive effects, hence require the scrutiny of antitrust authorities.
- The risk that a merger removes a potential competitor often deserves careful consideration.
- Most acquisitions by large digital platforms have not been investigated simply because they did not meet the turnover thresholds that in most jurisdictions would trigger notification – in digital industries, firms often start monetising only when they have reached a considerable customer base.
- Big tech companies have developed strong and entrenched positions in several markets. Their eco-systems absorb a large part of consumer attention and accumulate personal data from many different activities. Consumers could become dependent on these eco-systems and those who run them.
- Big tech firms can dominate their eco-systems becoming a private regulator, setting rules of conduct and excluding participants who allegedly misbehaved. This raises a number of issues for society, which go beyond standard market power issues.
The authors find that vigilant merger control can sometimes help to avoid problems. They argue that antitrust authorities should have the means to stop those mergers that are deemed anti-competitive and to assess whether possible pro-competitive effects outweigh the competition concerns.