Market definitions and tech monopolies
One of the basic building blocks of any competition case is market definition. If you’re claiming that a company has market dominance, and that it’s abusing that dominance, what market are we talking about? Very obviously, the company being prosecuted tries to draw the definition as widely as possible - ‘we compete with the entire planet!’ - and the prosecutor tries to draw it as narrowly as possible - ‘Ferrari has a monopoly of rear-engined Italian sport cars with horse logos!’
The fun part of this is that both of these definitions are true, and so you have dig rather deeper and work out what problem you’re trying to solve to work out what definition to use, because very often, picking the definition decides the outcome of the case, before it’s even started.
These questions come up a lot in talking about Amazon. If you read the accounts and do the numbers, you can work out that it has about 40% of US ecommerce (I wrote about this here). But US ecommerce is only part of total US retail - it was about 16% in 2019 and this year, with lockdown, it’s spiked to a bit over 20%.
So, does Amazon have ~40% of ecommerce or ~10% of retail? Amazon’s lawyers would argue, entirely reasonably, that Amazon competes with Walmart, Costco, Macy’s and Safeway - that it competes with other large retailers, not just ‘online’ retailers. Indeed, many people who argue most strongly for antitrust intervention against Amazon do (Read more...)