Department of Justice antitrust chief Makan Delrahim gave a speech to the Federal Institute of Telecommunications Conference in Mexico City on enforcing antitrust in the digital age on Wednesday, November 7.
He was invited to speak on “Challenges of Competition in Convergent Markets.” One of the challenges of such enforcement, he said was assessing market power, signaling that today’s Facebook could be tomorrow’s MySpace.
He said that given the fact that market power is a motivator for investment in a free market, the government must be careful about ascribing market power in markets subject to rapid change and added that assessment can be “tricky” in a digital economy.
“Market leaders are often displaced overall and within categories,” he said. “The existence of multi-sided platforms further complicates the analysis, especially where platforms provide services for free to one set of users subsidized through sales to another set of consumers.
“Traditional market share calculation may not be as helpful in such cases,” he said, adding: “A high market share does not always equate to market power. Depending on the circumstances, a firm with a high market share still may lack the ability to increase price or exclude competitors.”
He said market share and high profit margins may be the advantage of a first mover, which uses those profits to “recoup investment in sunk costs and provide incentives to take on the
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