Technology-Intensive Markets and the Myth of the Demise of Antitrust Scrutiny

Abstract

Antitrust experts usually claim that technology-intensive industries should be subject to less rigorous merger reviews. The cornerstone of this idea lies in the high dynamism that permeates those markets, creating environments of constant changes and permanent disruption. However, from time to time disruption allows mavericks to change market conditions so dramatically that former dominant firms might even have to move to neighbor markets to survive. When an industry reaches such a condition, one could expect that the new market leader would also be dominant for a larger interval – until the new paradigm is assimilated by the competitors and they catch up with the disruptor. In such cases, paradoxically, disruption would lead to long periods of abnormal market dominance.

Keywords: disruption, network externalities, technology, competition, merger review

JEL Classification: K21