Platforms, Disruptive Innovation, and Competition on the Market

This short piece aims to suggest that the concept of competition for the market is not sufficient to account for the competitive forces at play in the “digital economy”. It offers a richer concept of competition on the market, which differs from both competition in and for the market in that it assumes that market definition (in the business and hence also in the competition law sense) is itself a competitive parameter. The literature on disruptive innovation provides the best account of competition on the market. At first glance, including competition on the market in the analysis points to error risks that might have been neglected so far. It provides a reminder that enforcement should proceed prudently in order to avoid Type I errors, since competition on the market seems to have had more impact than competition law enforcement in the major cases of this century such as Microsoft, Intel and potentially also Google Search (Shopping). It also offers a solid basis to address Type II-error concerns around merger control as regards the acquisitions made by platforms, such as Facebook/WhatsApp.