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Are large digital platforms that deal directly with consumers “winner take all,” or natural monopoly, firms? That question is surprisingly complex and does not produce the same answer for every platform. The closer one looks at digital platforms the less they seem to be winner-take-all. As a result, competition can be made to work in most of them. Further, antitrust enforcement, with its accommodation of firm variety, is generally superior to any form of statutory regulation that generalizes over large numbers.

Assuming that an antitrust violation is found, what should be the remedy? Breaking up large firms subject to extensive scale economies or positive network effects is sure to be costly. In the past, structural relief of this type has led to lower output and higher prices or business firm failure. One likely exception is acquisitions of small firms that threaten to grow into substantial rivals.

If breakup is not the answer, then what are the best antitrust remedies? Sometimes the best way to deal with platform monopoly is to break up ownership and management rather than assets. Leaving the platform intact as a production entity but making ownership more competitive could actually increase output, benefitting consumers, labor, and suppliers. The history of antitrust law is replete with firms that are organized as single entities for many legal purposes but that also function as combinations and can be treated that way by antitrust law. A second possibility is forced interoperability or pooling of important information, which can make markets more competitive while actually increasing the value of positive network externalities.

Finally, this paper examines the problem of platform acquisition of nascent firms, where the biggest threat is not from horizontal mergers but rather from acquisitions of complements or differentiated technologies. For these, the tools we currently use in merger law are poorly suited. Here I offer some suggestions.


antitrust, monopoly, platforms, two-sided markets, Amazon, Facebook, Google, competition, natural monopoly

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Yale Law Journal