By: Richard N. Langlois (Truth on the Market)
Market share has long been the talisman of antitrust economics. Once we properly define what “the product” is, all we have to do is look at shares in the relevant market. In such an exercise, today’s high-tech firms come off badly. Each of them has a large share of the market for some “product.” What I appreciate about Nicolas Petit’s notion of “moligopoly” is that it recognizes that genuine competition is a far more complex and interesting phenomenon, one that goes beyond the category of “the product.”
In his chapter 4, Petit lays out how this works with six of today’s large high-tech companies, adding Netflix to the usual Big Five of Amazon, Apple, Facebook, Google, and Microsoft. If I understand properly, what he means by “moligopoly” is that these large firms have their hands in many different relevant markets. Because they seem to be selling different “products,” they don’t seem to be competing with one another. Yet, in a fundamental sense, they are very much competing with one another, and perhaps with firms that do not yet exist.
In this view, diversification is at the heart of competition. Indeed, Petit wonders at one point whether we are in a new era of “conglomeralism.” I would argue that the diversified high-tech firms we see today are actually very unlike the conglomerates of the late twentieth century. In my view, the earlier conglomerates were not equilibrium phenomena but rather short-lived vehicles for the radical restructuring of the American economy in the post- Bretton Woods era of globalization. A defining characteristic of those firms was that their diversification was unrelated, not just in terms of the SIC codes of their products but also in terms of their underlying capabilities. If we look only at the products on the demand side, today’s high-tech firms might also seem to reflect unrelated diversification. In fact, however, unlike in the twentieth-century conglomerates, the activities of present-day high-tech firms are connected on the supply side by a common set of capabilities involving the deployment of digital technology…
Featured News
Subscribers Defend $4.7 Billion Antitrust Verdict Against NFL in Court Filings
Jul 19, 2024 by
CPI
Von der Leyen Calls for Competition Policy to Boost EU Companies’ Growth
Jul 19, 2024 by
CPI
Vermont AG Sues Pharmacy Benefit Managers Over Drug Prices
Jul 18, 2024 by
CPI
Australians Face Increased Stamp Prices Following ACCC Approval
Jul 18, 2024 by
CPI
Live Nation Seeks Dismissal of DOJ Antitrust Allegations
Jul 18, 2024 by
CPI
Antitrust Mix by CPI
Antitrust Chronicle® – Private Equity Roll-Up Schemes
Jun 28, 2024 by
CPI
The FTC’s Focus on Private Equity is Warranted
Jun 28, 2024 by
CPI
Unraveling the Roll-Up: Private Equity’s Misunderstood Investment Strategy
Jun 28, 2024 by
CPI
Antitrust Focus on Private Equity Funds and Serial Acquisitions
Jun 28, 2024 by
CPI
Private Equity Roll-Ups Amidst Heightened Antitrust Enforcement
Jun 28, 2024 by
CPI