Tech Wars: Return of the Conglomerate ―Throwback or Dawn of a New Series for Competition in the Digital Era?―

There was once a time when conglomerates roamed supreme in the realms of the market. These large and colorful beasts were recognized as the dominant species of the corporate form, and were the subject of both praise and fear. Then beginning in the 1980s, their fate suddenly changed for the worse, and under the assault of so-called “bust up takeovers” these creatures receded from the corporate scene. This led commentators to observe by the turn of the century that the once vaunted conglomerate form was under the risk of becoming an “endangered” species. Or so they believed. The conglomerate model has begun to stage a comeback in a seemingly unlikely place for what many have relegated as an old-fashioned (and even ill-conceived) relic of the past – none other than the high-flying and perennially evolving tech industry. This astonishing return of the conglomerate model has coincided with an intriguing change in the nature of competition for the high-tech industry, particularly where platform businesses that harness network effects are involved. To put it bluntly, competition in the tech industry in the digital era has morphed into a multi-contact war – a war between conglomerate-like businesses, with clashes ensuing on multiple battlefields. What does this then portend for antitrust law and analysis? Both the change in the competitive nature of the tech industry and the concomitant resurgence of the conglomerate model in today’s digital era have garnered little, if any, substantive attention so far within antitrust circles. This does not mean that the multi-dimensional characteristics of market competition involving the tech industry has been completely overlooked. Much ink has been spilt over the attributes of multi-sided markets, and the network effects that course through platforms straddling such multiple dimensions of the market. Nor is the consideration of multi-contact competition completely novel for antitrust. Antitrust has grappled with aspects of multi-contact competition going back to as far as more than half a century ago, mostly in the context of conglomerate mergers. But, there has not yet been a proper analysis of the recent rise of multi-contact competition waged by conglomerate businesses (either in substance or true form) in today’s tech industry. This essay is a preliminary foray into certain key aspects of multi-contact competition waged by conglomerate businesses in the tech industry, and its implications for antitrust law and analysis. Through the discussion, we will observe how insights from the field of strategic management can prove invaluable for the analysis, and that the careful consideration of the firm’s strategy is a prerequisite to properly analyzing this phenomenon, as it should be for antitrust analysis in general.