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In the past years, Big Tech has come under increased scrutiny from antitrust authorities in the EU and in the US. Whether through private or public litigation, cases have been brought before courts on both sides of the Atlantic, and colossal sanctions have been pronounced on monopolization charges. In a context where inequalities continue to rise and where the power of large corporations is being questioned, a form of “antitrust populism” has crept into political discourse. But does Big Tech really fear antitrust action? Is antitrust enforcement necessary to reduce concentration and abusive practices in digital markets? Is it sufficient?

The tech industry is prone to concentration

Messaging applications, social media, and other networked services strongly benefit from network externalities: utility for a new user increases with the number of current users. Take Facebook for example: the utility I derive from a social network clearly depends on the number of other users that are already using the platform. Google’s case is more complex: it benefits from network externalities if its search accuracy increases with each additional user. Alternatively, it benefits from indirect network externalities, in that advertisers, forming one side of the platform, derive greater utility from a larger number of users on the other side, and vice versa. …

Jules Beley

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