Antitrust, Two-Sided Markets, and Platform Competition: The Case of the XM-Sirius Merger

Abstract:     
On July 9, 2007 The Progress & Freedom Foundation's Scott Wallsten filed comments regarding the proposed XM-Sirius merger at the Federal Communications Commission (FCC), explaining that this merger poses unique new challenges for antitrust officials.

Specifically, companies like Sirius and XM are platforms in two-sided markets that must attract subscribers and content providers, both of whom can choose among a variety of platforms. In addition, the platforms themselves are dynamic in that they can potentially carry any digital information, not just the services they currently offer.

A merger analysis of competing platforms that considers only a single component in this complex market is likely to reach an incorrect conclusion. In the case of the XM-Sirius merger, officials should consider not only subscribers, but also content providers, competing platforms, platforms that are potential competitors, and services the platforms in question may provide in the future that they do not today.

Number of Pages in PDF File: 9

Keywords: Antitrust, two-sided markets, platform competition, platform, xm, sirius, xm-sirius, merger, FCC, subscribers, digital information, network, externalities, barriers to entry, satellite radio, externalities, programming, satellite, SSNIP, Howard Stern, music platforms, multihoming

JEL Classification: D4, D40, D42, L1, L11, L12, L4, L40, L82, Z00

Accepted Paper Series