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Big Tech Acquisitions and the Potential Competition Doctrine: The Case of Facebook

Mark Glick () and Catherine Ruetschlin ()
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Mark Glick: University of Utah
Catherine Ruetschlin: University of Utah

No 104, Working Papers Series from Institute for New Economic Thinking

Abstract: The Big Tech companies, including Google, Facebook, Amazon, Microsoft and Apple, have individually and collectively engaged in an unprecedented number of acquisitions. When a dominant firm purchases a start-up that could be a future entrant and thereby increase competitive rivalry, it raises a potential competition issue. Unfortunately, the antitrust law of potential competition mergers is ill-equipped to address tech mergers. We contend that the Chicago School`s assumptions and policy prescriptions hobbled antitrust law and policy on potential competition mergers. We illustrate this problem with the example of Facebook. Facebook has engaged in 90 completed acquisitions in its short history (documented in the Appendix to this paper). Many antitrust commentators have focused on the Instagram and WhatsApp acquisitions as cases of mergers that have reduced potential competition. We show the impotence of the potential competition doctrine applied to these two acquisitions. We suggest that the remedy for Chicago School damage to the potential competition doctrine is a return to an empirically tractable structural approach to potential competition mergers.

Keywords: Antitrust Law; Big Tech Companies; Digital Markets; Mergers; Potential Competition Big Tech Acquisitions and the Potential Competition Doctrine: The Case of Facebook (search for similar items in EconPapers)
JEL-codes: K21 L40 L86 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2019-10
New Economics Papers: this item is included in nep-big, nep-com, nep-ict, nep-ind, nep-law, nep-ore and nep-pay
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https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3482213 First version, 2019 (text/html)

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Persistent link: https://EconPapers.repec.org/RePEc:thk:wpaper:104

DOI: 10.36687/inetwp104

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