As Big Tech reinvented the game, we must rewrite the rules – London Business School Review

To find a solution for society we need to take a step back, understand the business models of the platforms that aspire to run an ever increasing part of our lives, and then revisit regulation from the bottom up. The economics of digital businesses, with easy scalability, lock-ins and winner-takes-most dynamics, create problems of dominance unlike the ones weve been used to, as recent government-sponsored reports from the UK and the EU and academic work in the US confirmed.

Consider Big Tech M&A. Microsoft paid $8.5bn (6.5bn) for Skype and $26bn for LinkedIn, while Facebook spent $22bn on WhatsApp. These massive investments helped acquirers cement their hold over their respective ecosystems and snuff out the threat from a potentially competing platform a fact that came to haunt Google and Apple in the recent Congressional hearings of their CEOs.

The problem is that todays antitrust playbook is incompatible with the new rules of digital platforms and ecosystems. For instance, out of Alphabets tally of 150+ acquisitions over the last decade, EU and US competition authorities opened cases for just six and ultimately took action on none at all. Is Google really so pro-competition? Or are we working with outdated ideas of what competition and power really are?

This is by no means an idle question. Right now, Google, Apple, and Facebook are sitting on combined cash reserves of $570bn, or three times the GDP of my native Greece. They can buy anything they want, given the looming contraction. Should we really allow this? Or should we try to foster more meaningful and productive competition between ecosystems?

Recently, LBS, UCL, and the WEF co-organised a workshop on the regulation of platforms and ecosystems, involving several heads of European competition authorities and Big Tech leaders. The event highlighted a systemic unease and growing calls for a rethink of intra-platform competition and how all-powerful orchestrators manage members of their ecosystems. The current stock-market valuations of Big Tech suggest their power will grow, raising questions about our entire regulatory apparatus. Whether or not we intervene, our choices today may set the stage for the competitive landscape for decades to come.

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As Big Tech reinvented the game, we must rewrite the rules - London Business School Review