Merger Control in the Age of Digital Markets

The growth of Internet access enabled the creation of functions (e.g., e-commerce and search) that were initially convenient but which a small number of firms used to achieve winner-takes-all, through the application of ICTs, network externalities and two-sided markets. They turned themselves into platforms that now extract massive quantities of ever more personal data allowing them to direct advertisements and customised offers intended to increase the spending of individuals. These present novel challenges to competition authorities that are imperfectly explained in economic theory, with the platforms lobbying aggressively to insist they improve consumer welfare. The GAFA (Google, Apple, Facebook & Amazon) platforms have also acquired hundreds of start-ups, with limited revenues, no profits and no easily defined market, but with considerable potential in future competition and revenues, judging by the prices paid. China has its own set of firms and institutions, behind its Great Fire Wall, with similar issues concerning platforms, but apparently not yet attracting the same level of attention. Africa has a mixture of GAFA and its own, rather smaller, platforms together with the more powerful mobile operators with their increasing financial services platforms. Institutions in Africa are weaker, with many countries lacking one or more of antitrust, cybersecurity or data protection agencies, limiting their ability to ensure proper functioning of markets