26 Pages Posted: 9 Mar 2021 Last revised: 2 Feb 2022
Date Written: February 16, 2021
We introduce the concept of platform annexation, whereby a platform annexes tools or other adjacent markets in a way that interferes with multi-homing by users, lessening competition. Traditional analysis of mergers often falls back on a simple categorization of conduct into horizontal and vertical. We argue that platform annexation bears more resemblance to horizontal conduct than vertical and is capable of horizontal foreclosure that harms consumers. In particular, while traditional vertical integration in a supply chain has the potential to reduce conflicts of interest and may favor efficiency, platform annexation creates conflicts of interest and has the potential to reduce efficiency, particularly when undertaken by a market leader who has the incentive to reduce multi-homing. Thus, it should be viewed with substantial skepticism by regulators and enforcers.
Keywords: antitrust, platform, merger, monopolization
JEL Classification: L!2, L41
Suggested Citation: Suggested Citation