02 Jul 2021
Posted in Thematic Research
Facebook’s antitrust victory shows that new legislation is necessary to tackle digital monopolies, says GlobalData
Following the news that Facebook stock market value reached $1tn after it scored an antitrust victory;
Laura Petrone, Senior Analyst in the Thematic Research team at GlobalData, a leading data and analytics company, offers her view:
“The US judge’s decision is a big setback for the Federal Trade Commission (FTC) and antitrust regulators, but it also shows that existing antitrust rules are not fit for purpose in the digital era. New legislation to tackle digital monopolies is especially desirable, as traditional definitions of market dominance or consumer harm don’t reflect the reality of today’s digital markets.
“Significantly, members of the US House of Representatives have recently introduced five different bills that would prevent digital platforms from abusing their market powers. The battle against digital monopolies could be fought in Congress, rather than in court.
“Breaking up big companies, as contemplated by the FTC in its lawsuits against Facebook, is easier said than done. Proof that breaking up Facebook is the necessary remedy would be difficult. It is also unexplored territory for regulators and would create a critical precedent for future M&A activity.
“At the same time, there is serious doubt about whether separating companies would increase competition in any key markets. While it would undoubtedly reduce each platform’s power in the short-to-medium term, the underlying market dynamics, such as network effects and economies of scale, would continue to favor concentration.”
Laura Petrone has recently conducted a webinar on ‘The Future of Tech Regulation’. Watch the recording by clicking on this link. Pass code is Ay%7$&P0