Antitrust Reform and Big Tech Firms
Congressional research reportNov 21, 2023
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Antitrust Reform and Big Tech Firms
Updated November 21, 2023
Congressional Research Service
https://crsreports.congress.gov
R46875
SUMMARY
Antitrust Reform and Big Tech Firms
Antitrust has become a hot topic. After decades as a mostly technocratic discipline, competition
policy now commands the attention of lawmakers, academics, and the general public.
One of the driving forces behind this trend has been the rise of a handful of large technology
firms: Facebook (now Meta Platforms), Google, Amazon, and Apple. While these “Big Tech”
companies have affected the daily lives of billions, they are also accused of obtaining and
solidifying dominant positions through anticompetitive conduct.
R46875
September 13, 2023
Jay B. Sykes
Legislative Attorney
For a copy of the full report,
please call 7-5700 or visit
www.crs.gov.
Meta is currently defending a Federal Trade Commission (FTC) lawsuit that seeks to unwind its
acquisitions of the photo-sharing service Instagram and the messaging app WhatsApp.
Google is embroiled in litigation with the Department of Justice (DOJ), state attorneys general, and private plaintiffs over
alleged exclusionary conduct related to its search engine, app distribution on Android mobile devices, and its
digital-advertising businesses.
The FTC and a putative class of private plaintiffs have accused Amazon of stifling competition among online marketplaces.
The lawsuits allege that Amazon has excluded rivals by implementing policies that punish sellers for discounting their
products on other websites. The FTC’s complaint also claims that Amazon has tied its Prime subscription program to the use
of its fulfillment services, hindering the development of independent fulfillment providers that could make selling on other
marketplaces more attractive.
Several of Apple’s practices have attracted scrutiny, including the firm’s restrictions on the distribution of iOS apps, its use
of competitively sensitive information derived from third-party app developers, and its treatment of its proprietary apps.
Some lawmakers have also expressed concern about the large number of acquisitions that the Big Tech firms have
undertaken over the past decade. In particular, they have worried about the possibility that some of these transactions
eliminated sources of potential or nascent competition.
Many of these concerns have prompted calls for legal reform. Some commentators have argued that ex post adjudication is
ill-equipped to grapple with competition issues in platform markets that have tipped in favor of a single dominant firm. Other
critiques of the existing framework focus on specific doctrinal rules or the alleged shortcomings of the consumer-welfare
standard—a general normative benchmark that has heavily influenced current law.
For their part, defenders of existing law have emphasized the differences between the Big Tech firms. This heterogeneity,
they contend, counsels in favor of the fact-specific approach employed by current doctrine and against categorical regulatory
treatment. Supporters of the consumer-welfare standard argue that it provides a principled and coherent decision-making
framework, in contrast to alternative regimes that would embrace more amorphous goals.
While some reform proposals would adopt special competition regulations for large tech platforms, others would work within
existing antitrust law by adjusting burdens of proof and changing certain doctrinal requirements.
The regulatory route raises questions of how to scope the relevant regulations and select an appropriate regulator to
administer them. On the issue of scope, two general models have emerged. One would allow a regulator to designate covered
platforms that offer specified services and meet certain quantitative and qualitative criteria. Designated firms would then be
subject to the same set of special competition regulations. The other approach is more targeted and would apply special
regulations to individual markets.
As a substantive matter, proposals to reform the competition laws governing Big Tech firms fall into five categories:
(1) ex ante conduct rules, (2) structural separation and line-of-business restrictions, (3) special merger rules,
(4) interoperability and data-portability mandates, and (5) changes to general antitrust doctrine.
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Antitrust Reform and Big Tech Firms
Contents
Antitrust Law: The Basics ............................................................................................................... 2
Restraints of Trade .................................................................................................................... 2
Monopolization ......................................................................................................................... 4
Monopoly Power................................................................................................................. 4
Exclusionary Conduct ......................................................................................................... 6
Mergers & Acquisitions .......................................................................................................... 16
Theoretical Approaches to Antitrust ........................................................................................ 20
The Big Tech Firms: A Summary of Selected Antitrust Allegations ............................................. 23
Meta Platforms ........................................................................................................................ 23
Allegations of Market Power ............................................................................................ 24
Allegations of Anticompetitive Conduct........................................................................... 24
Google ..................................................................................................................................... 26
Online Search .................................................................................................................... 26
Mobile Operating Systems and App Distribution ............................................................. 29
Digital Advertising ............................................................................................................ 32
Amazon ................................................................................................................................... 34
Allegations of Market Power ............................................................................................ 34
Allegations of Anticompetitive Conduct........................................................................... 37
Apple ....................................................................................................................................... 40
Allegations of Market Power ............................................................................................ 40
Allegations of Anticompetitive Conduct........................................................................... 41
Big Tech Mergers and Acquisitions ........................................................................................ 42
Antitrust Reform and Big Tech: General Issues ............................................................................ 43
Are Tech Platforms Special? ................................................................................................... 44
Revisiting the Goals of Antitrust: The Neo-Brandeisian Movement ...................................... 48
Scoping Reform Proposals ...................................................................................................... 51
The Designated-Platform Approach.................................................................................. 52
The Market-Specific Approach ......................................................................................... 56
Enforcement ............................................................................................................................ 56
Reform Proposals .......................................................................................................................... 57
Ex Ante Conduct Rules............................................................................................................ 57
Self-Preferencing .............................................................................................................. 57
Tying ................................................................................................................................. 61
Interoperability and Data Access ...................................................................................... 62
Use of Nonpublic User Data ............................................................................................. 63
Most-Favored-Nation Policies .......................................................................................... 63
App Preinstallation............................................................................................................ 64
Structural Separation and Line-of-Business Restrictions........................................................ 65
Mergers & Acquisitions .......................................................................................................... 67
Substantive Merger Law ................................................................................................... 67
The Merger Review Process ............................................................................................. 71
Interoperability & Data Portability ......................................................................................... 72
Changes to General Antitrust .................................................................................................. 74
Exclusionary Conduct ....................................................................................................... 74
Mergers ............................................................................................................................. 76
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Contacts
Author Information........................................................................................................................ 77
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Antitrust Reform and Big Tech Firms
I
n 2012, a prominent scholar lamented the diminished significance of antitrust in the United
States.1 Although there was once a flourishing antitrust movement, he argued, the subject
appeared to attract little interest from lawmakers, academics, and the public.2 Political
candidates rarely mentioned competition issues, opinion polls reflected indifference toward
economic concentration, and the enforcement agencies seemed to operate with a narrow
view of antitrust’s goals.3
Things have changed. In the past several years, antitrust has resurfaced as a topic of both popular
and political concern.4 The White House has issued an executive order outlining a
“whole-of-government” approach to competition policy;5 advocates of reform have been
appointed to lead the Federal Trade Commission (FTC) and the Department of Justice’s (DOJ’s)
Antitrust Division;6 and Congress has considered a suite of proposals to overhaul various aspects
of antitrust doctrine.7
In the words of one commentator, antitrust now “stands at its most fluid and negotiable moment
in a generation.”8 The subject has not had such political salience, another contends, since 1912.9
Interest in reform has been wide-ranging: “[e]verything is up for grabs, and nothing is free of
scrutiny.”10
One of the driving forces behind this trend has been the rise of a handful of large technology
firms: Facebook (now Meta Platforms), Google, Amazon, and Apple. In 2020, a House
subcommittee released a detailed report (the HJC Report) concluding that the four companies had
obtained and solidified dominant positions through anticompetitive conduct.11 These “Big Tech”
firms have also faced antitrust lawsuits from regulators and private plaintiffs, both in the United
States and abroad.12
This report provides an overview of antitrust issues involving the four Big Tech firms and related
proposals for legislative reform. It is divided into four parts. First, the report provides an
introduction to basic antitrust principles. Second, it reviews selected antitrust allegations against
the Big Tech companies. Third, it discusses conceptual issues with proposals to reform the
1 Maurice E. Stucke, Reconsidering Antitrust’s Goals, 53 B.C. L. REV. 551, 553 (2012).
2 Id. at 553-56.
3 Id.
4 Daniel A. Crane, Antitrust’s Unconventional Politics, 104 VA. L. REV. ONLINE 118, 118-21 (2018).
5 Exec. Order No. 14,036, Promoting Competition in the American Economy, 86 Fed. Reg. 36,987, 36,989 (July 14,
2021).
6 Brent Kendall, Senate Confirms Jonathan Kanter as Justice Department Antitrust Chief, WALL ST. J. (Nov. 16, 2021),
https://www.wsj.com/articles/senate-confirms-jonathan-kanter-as-justice-department-antitrust-chief-11637104400;
David McCabe & Cecilia Kang, Biden Names Lina Khan, a Big-Tech Critic, as F.T.C. Chair, N.Y. TIMES (June 15,
2021), https://www.nytimes.com/2021/06/15/technology/lina-khan-ftc.html.
7 See, e.g., American Innovation and Choice Online Act, S. 2033, 118th Cong. (2023); Prohibiting Anticompetitive
Mergers Act of 2022, S. 3847, 117th Cong. (2022); Platform Competition and Opportunity Act, S. 3197, 117th Cong.
(2021); Trust-Busting for the Twenty-First Century Act, S. 1074, 117th Cong. (2021); Competition and Antitrust Law
Enforcement Reform Act of 2021, S. 225, 117th Cong. (2021); Ending Platform Monopolies Act, H.R. 3825, 117th
Cong. (2021).
8 Crane, supra note 4, at 118.
9 Carl Shapiro, Antitrust in a Time of Populism, 61 INT’L J. INDUS. ORG. 714, 715 (2018).
10 ALAN J. DEVLIN, REFORMING ANTITRUST 265 (2021).
11 INVESTIGATION OF COMPETITION IN DIGITAL MARKETS, MAJORITY STAFF REPORT AND RECOMMENDATIONS, SUBCOMM.
ON ANTITRUST, COMMERCIAL AND ADMIN. L. OF THE H. COMM. ON THE JUDICIARY 12-17 (2020) [hereinafter “HJC
REPORT”]. This report lists the Big Tech firms in the same order as the subcommittee’s report.
12 See infra “The Big Tech Firms: A Summary of Selected Antitrust Allegations.”
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competition laws governing Big Tech. Fourth, the report analyzes the substance of specific
categories of reform proposals.
Antitrust Law: The Basics
The antitrust laws aim to protect economic competition by prohibiting unreasonable restraints of
trade,13 exclusionary conduct by dominant firms,14 and mergers and acquisitions that may
“substantially” lessen competition or “tend to create a monopoly.”15
The following subsections provide a high-level overview of antitrust doctrine to lay the
groundwork for later discussions of competition issues in tech markets and proposals for legal
reform.
Restraints of Trade
Section 1 of the Sherman Act prohibits “every” contract or conspiracy “in restraint of trade.”16
Despite this categorical language, the Supreme Court has interpreted Section 1 to bar only
unreasonable restraints of trade that harm competition.17
Applying this general standard, the Court has identified some types of agreements that are so
likely to be anticompetitive that they are deemed per se illegal, meaning courts need not inquire
into their effects in individual cases.18 Restraints in this category include agreements among
competitors (“horizontal” agreements) to fix prices,19 divide markets,20 and restrain output.21
While some types of agreements are per se illegal under Section 1, most restraints are evaluated
using a standard called the “rule of reason.”22 Under the rule of reason, courts conduct
fact-specific assessments of a defendant’s market power and the details of a challenged agreement
to determine a restraint’s competitive effects.23
This inquiry typically proceeds via a three-step burden-shifting framework. In that framework,
the plaintiff has the initial burden to prove that the challenged restraint has a substantial
anticompetitive effect.24 Plaintiffs can make this showing directly or indirectly. Direct evidence of
anticompetitive harm involves “proof of actual detrimental effects on competition,” such as
reduced output, increased prices, or decreased quality.25 The indirect route involves proof of
market power,26 plus “some evidence that the challenged restraint harms competition”—for
13 15 U.S.C. § 1.
14 Id. § 2.
15 Id. § 18.
16 Id. § 1.
17 Texaco Inc. v. Dagher, 547 U.S. 1, 5 (2006).
18 Id.
19 United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 218 (1940).
20 N. Pac. R.R. Co. v. United States, 356 U.S. 1, 5 (1958).
21 NCAA v. Bd. of Regents of Univ. of Okla., 468 U.S. 85, 100 (1984).
22 Ohio v. Am. Express Co. (Amex), 138 S. Ct. 2274, 2283-84 (2018).
23 Id. at 2284.
24 Id.
25 Id. (cleaned up).
26 The Supreme Court has offered various definitions of “market power,” many of which are related to a firm’s ability
(continued...)
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example, evidence that the restraint is the type of restriction that tends to produce anticompetitive
outcomes.27
If the plaintiff makes a prima facie case of anticompetitive harm, the burden shifts to the
defendant to show a procompetitive justification for the challenged restraint.28 For example, a
defendant might argue that the restraint increases output, creates operational efficiencies, makes a
new product available, enhances product quality, or broadens consumer choice.29
If the defendant makes this showing, the burden shifts back to the plaintiff to demonstrate that the
relevant procompetitive benefits could be reasonably achieved through less anticompetitive
means.30 Some courts have also added a fourth step in which they balance a restraint’s
anticompetitive and procompetitive effects.31
Although most agreements are evaluated under this framework, courts have also recognized a
third standard that lies between the full rule of reason and per se illegality. This intermediate
approach—often called “quick look” review—has been applied to agreements that are not per se
unlawful but nevertheless exhibit characteristics that make their likely anticompetitive effects
clear.32 Different courts have described quick-look analysis in different ways.33 The basic idea,
however, is that the plaintiff in a quick-look case can discharge its initial burden without the type
of detailed evidence of competitive harm required under the full rule of reason.34 Defendants in
quick-look cases, meanwhile, have the opportunity to offer procompetitive justifications for their
conduct, distinguishing quick-look review from per se analysis.35
to profitably charge prices higher than those that would exist in a competitive market—that is, a market with many
buyers and sellers, homogeneous products, perfect information, no barriers to entry or exit, and no transaction costs.
LAWRENCE A. SULLIVAN, ET AL., THE LAW OF ANTITRUST: AN INTEGRATED HANDBOOK 47-48 (4th ed. 2023). Those
definitions sweep quite broadly, however, because virtually every firm selling a differentiated product has some market
power in this sense; perfect competition is a theoretical abstraction that seldom—if ever—exists in the real world. Id. at
47. Commentators have thus observed that, in practice, the legal concept of market power appears to demand a
substantial degree of pricing power. DANIEL FRANCIS & CHRISTOPHER JON SPRIGMAN, ANTITRUST: PRINCIPLES, CASES,
AND MATERIALS 73 (2023). As discussed below, courts typically assess allegations of market power by evaluating
structural factors like a firm’s market share and any entry barriers in the relevant market. Id. at 116. A market share of
less than 30% is typically insufficient for market power. Id. In contrast, a share of 44% has been deemed sufficient
when accompanied by evidence that entry barriers are high and that competitors cannot readily expand their output. Id.
Higher shares have also supported an inference of market power when paired with evidence of entry barriers. Id.
(collecting cases). The process for defining antitrust markets is discussed below.
27 Amex, 138 S. Ct. at 2284.
28 Id.
29 Law v. NCAA, 134 F.3d 1010, 1023 (10th Cir. 1998).
30 Amex, 138 S. Ct. at 2284.
31 See, e.g., Epic Games, Inc. v. Apple, Inc., 67 F.4th 946, 993-94 (9th Cir. 2023) (recognizing that Supreme Court
precedent “neither requires nor disavows” a fourth step, while interpreting Ninth Circuit precedent to require a fourth
balancing step); see also Michael A. Carrier, The Rule of Reason: An Empirical Update for the 21st Century, 16 GEO.
MASON L. REV. 827, 827 (2009) (concluding that courts reached a fourth “balancing” step in 4% of rule-of-reason cases
decided between 1977 and 1999).
32 Herbert Hovenkamp, The Rule of Reason, 70 FLA. L. REV. 81, 122-31 (2018) [hereinafter “Hovenkamp, The Rule of
Reason”]. Often, “quick look” analysis is described as a type of rule-of-reason analysis, rather than a third standard of
review, on the theory that the rule of reason represents a sliding scale that imposes different requirements based on the
context. See id. at 123-24 (rejecting the idea that quick-look review represents a third “silo” of antitrust analysis that is
distinct from the rule of reason).
33 Id. at 122.
34 FRANCIS & SPRIGMAN, supra note 26, at 191.
35 Id.
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Monopolization
While Section 1 of the Sherman Act governs agreements between firms, Section 2 prohibits
dominant companies from engaging in concerted or unilateral exclusionary conduct by making it
unlawful to monopolize, attempt to monopolize, or conspire to monopolize.36
The monopolization offense has two elements:
1. the possession of monopoly power; and
2. “the willful acquisition or maintenance of that power as distinguished from
growth or development as a consequence of a superior product, business acumen,
or historical accident.”37
The second element is often referred to as “exclusionary” or “anticompetitive” conduct.38
Monopoly Power
The Supreme Court has explained that a firm possesses monopoly power if it has the ability to
“control prices or exclude competition.”39 Although that standard is similar to many descriptions
of market power,40 the Court has clarified that monopoly power under Section 2 of the Sherman
Act requires “something greater” than market power under Section 1.41 Courts have thus
concluded that monopoly power entails a large degree of market power.42
Some courts have held that monopoly power can be established through direct evidence of
supra-competitive prices and restricted output.43 However, this type of direct proof is rarely
available.44 As a result, courts typically evaluate allegations of monopoly power by examining
structural factors like a defendant’s market share and any entry barriers in the relevant market.45
These inquiries require a plaintiff to define the scope of the relevant market—an exercise that
turns on the range of items that are reasonable substitutes for one another.46
There are two general approaches to market definition. One approach—the hypothetical
monopolist test (HMT)—attempts to identify the smallest grouping of products over which a
36 15 U.S.C. § 2.
37 United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966).
38 See, e.g., EINER ELHAUGE, UNITED STATES ANTITRUST LAW AND ECONOMICS 211 (3d ed. 2018).
39 United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 391 (1956).
40 See, e.g., Fortner Enters. v. U.S. Steel Corp., 394 U.S. 495, 503 (1969) (defining market power as “the ability of a
single seller to raise price and restrict output”).
41 Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 481 (1992).
42 See, e.g., Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 894 (10th Cir. 1991); Deauville Corp. v. Federated
Dep’t Stores, Inc., 756 F.2d 1183, 1192 n.6 (5th Cir. 1985). As noted, the legal concept of “market power” in practice
appears to involve a substantial degree of “market power” as that concept is used in economic theory. See supra
note 26. One commentator has thus observed that monopoly power requires “a substantial degree of a sort of power that
is itself defined to exist only when substantial.” Einer Elhauge, Defining Better Monopolization Standards, 56 STAN. L.
REV. 253, 259 (2003).
43 Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 307 (3d Cir. 2007); PepsiCo, Inc. v. Coca-Cola Co., 315 F.3d 101,
107 (2d Cir. 2002) (per curiam); Conwood Co. v. U.S. Tobacco Co., 290 F.3d 768, 783 n.2 (6th Cir. 2002).
44 United States v. Microsoft Corp., 253 F.3d 34, 51 (D.C. Cir. 2001) (per curiam). Direct proof of market power is
rarely available for a variety of reasons. Perhaps most significantly, it can be difficult to identify and measure a firm’s
marginal costs. PHILLIP AREEDA, ET AL., ANTITRUST ANALYSIS: PROBLEMS, TEXT, AND CASES 529 (7th ed. 2013).
45 Microsoft, 253 F.3d at 51.
46 United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 395 (1956).
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single seller could exercise significant market power.47 Under a version of the HMT known as the
SSNIP test, this inquiry starts with the product at issue in a given case and asks whether a
hypothetical monopolist selling that product could profitably increase its price by a significant
amount (typically 5%-10%) for a non-transitory period of time (typically one year or more).48 If
the answer is yes, then the product represents a relevant antitrust market. However, if consumer
substitution would render such a price increase unprofitable, the SSNIP test prescribes that the
market must be expanded to include substitute products. This process continues until the point at
which a “small but significant non-transitory increase in price” for one of the products would be
profitable.49
A second approach to market definition involves an evaluation of qualitative similarities and
differences between products and services. This methodology is derived from the Supreme
Court’s 1962 decision in Brown Shoe Co. v. United States, which identified a series of “practical
indicia” that may be relevant to an evaluation of a market’s boundaries.50 These qualitative factors
include industry or public recognition of separate markets, a product’s peculiar characteristics and
uses, unique production facilities, distinct customers, distinct prices, sensitivity to price changes,
and specialized vendors.51
The HMT and Brown Shoe’s qualitative inquiry both attempt to determine the range of substitutes
that constrain a firm’s exercise of market power,52 and judicial decisions often employ both
approaches in defining markets.53
As mentioned, once a market has been defined, courts typically assess claims of monopoly power
by evaluating a defendant’s market share and other structural factors like entry barriers.54 When
entry barriers are present, a market share in excess of 70% can establish a prima facie case of
47 Gregory J. Werden, The 1982 Merger Guidelines and the Ascent of the Hypothetical Monopolist Paradigm, 71
ANTITRUST L.J. 253, 253-54 (2003).
48 FRANCIS & SPRIGMAN, supra note 26, at 68.
49 Id. The SSNIP test runs into a well-recognized baseline problem in cases where a firm is alleged to be charging
monopoly prices. In those cases, a SSNIP above prevailing prices may prove unprofitable not because a candidate
market is too small to confer significant pricing power on a hypothetical monopolist, but because the defendant is
already fully exploiting its monopoly power. The use of prevailing prices to define markets in such circumstances is
often called the “Cellophane fallacy,” because the Supreme Court committed this alleged error in a 1956
monopolization case involving cellophane and other packaging materials. E.I. du Pont de Nemours & Co., 351 U.S. at
400-01. Regulators and courts can avoid this problem by using competitive prices rather than prevailing prices as the
baseline for evaluating whether a SSNIP would be profitable. AREEDA, ET AL., supra note 44, at 552; see also DEP’T OF
JUST. & FED. TRADE COMM’N, HORIZONTAL MERGER GUIDELINES § 4.1.2 (2010) [hereinafter “HORIZONTAL MERGER
GUIDELINES”] (acknowledging that use of the SSNIP test may require this modification in certain cases). That
approach, however, raises the same difficulties with determining competitive prices that often bedevil attempts to
establish market power with direct evidence. AREEDA, ET AL., supra note 44, at 552. A widely referenced textbook
notes that the courts “have avoided tackling this issue and mostly act as if raising price above competitive levels were a
self-evidently meaningful and applicable standard.” Id.
50 370 U.S. 294, 325 (1962).
51 Id.
52 FRANCIS & SPRIGMAN, supra note 26, at 74. The above discussion focuses on one component of market definition:
the relevant product market. In certain cases—for example, where transportation costs are high or consumers prefer a
local provider—geography may also represent an important aspect of market definition. Id. at 111.
53 E.g., United States v. Bertelsmann SE & Co., 2022 WL 16949715 at *12-13, 19-20 (D.D.C. 2022); United States v.
H&R Block, Inc., 833 F. Supp. 2d 36, 50-60 (D.D.C. 2011); Olin Corp. v. FTC, 986 F.2d 1295, 1298-99 (9th Cir.
1993).
54 See, e.g., U.S. Anchor Mfg., Inc. v. Rule Indus., Inc., 7 F.3d 986, 999 (11th Cir. 1993).
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monopoly power.55 Courts rarely find monopoly power, by contrast, when a firm’s market share is
less than 50%.56 Shares between 50% and 70% present “the greatest uncertainty,”57 with some
courts deeming shares in that range to be insufficient absent additional evidence.58
To establish monopoly power, plaintiffs also typically must show that a defendant’s dominant
position is likely to be durable—for example, with evidence of significant barriers to entry.59
Entry barriers may include legal and regulatory requirements, control of an essential resource,
entrenched buyer preferences, and economies of scale.60 In some digital markets, entry barriers
may also emerge from network effects (which cause a product’s utility to increase as it gains
more users) and significant switching costs (high costs that users of a product would face in
switching to a substitute).61
Exclusionary Conduct
As noted, the second element of a monopolization claim is exclusionary conduct. The Supreme
Court has described this element as involving “the willful acquisition or maintenance of
[monopoly] power as distinguished from growth or development as a consequence of a superior
product, business acumen, or historical accident.”62
As a general standard, many have found that description unhelpful. Firms often “willfully” try to
obtain monopoly status by developing superior products and by deploying business acumen.63
Moreover, in offering the above formulation, the Supreme Court did not define “business
acumen,” leaving little guidance as to when practices like aggressive price cutting, bundling
separate products, or refusing to share property with rivals represent savvy strategy as opposed to
unlawful exclusion.64
While academics have made several attempts to develop an alternative general standard, courts
have not decisively embraced any of them.65 Instead, the doctrine contains a variety of tests that
55 1 ABA SECTION OF ANTITRUST LAW, ANTITRUST DEVELOPMENTS 230 (9th ed. 2022) [hereinafter “ANTITRUST
DEVELOPMENTS”] (collecting cases).
56 Id. at 231.
57 Id. at 231-32.
58 United States v. Dentsply Int’l, Inc., 399 F.3d 181, 187 (3d Cir. 2005) (“Absent other pertinent factors, a share
significantly larger than 55% has been required to establish prima facie [monopoly] power.”); PepsiCo, Inc. v.
Coca-Cola Co., 315 F.3d 101, 109 (2d Cir. 2002) (“Absent additional evidence, such as an ability to control prices or
exclude competition, a 64 percent market share is insufficient to infer monopoly power.”); Colo. Interstate Gas Co. v.
Natural Gas Pipeline Co. of Am., 885 F.2d 683, 694 n.18 (10th Cir. 1989) (noting that “lower courts generally require a
minimum market share of between 70% and 80%” to support a finding of monopoly power); Exxon Corp. v. Berwick
Bay Real Estate Partners, 748 F.2d 937, 940 (5th Cir. 1984) (per curiam) (noting that “monopolization is rarely found
when the defendant’s share of the relevant market is below 70%”); United States v. Aluminum Co. of Am., 148 F.2d
416, 424 (2d Cir. 1945) (Hand, J.) (indicating that it is “doubtful” that a share of 64% is sufficient for monopoly
power); but see Tops Mkts., Inc. v. Quality Mkts, Inc., 142 F.3d 90, 99 (2d Cir. 1998) (indicating that a share between
50% and 70% can “occasionally” show monopoly power if other factors support the inference).
59 See, e.g., Lenox MacLaren Surgical Corp. v. Medtronic, Inc., 762 F.3d 1114, 1123-25 (10th Cir. 2014); W. Parcel
Express v. United Parcel Serv. of Am., Inc., 190 F.3d 974, 975 (9th Cir. 1999).
60 Rebel Oil Co., Inc. v. Atlantic Richfield Co., 51 F.3d 1421, 1439 (9th Cir. 1995).
61 FTC v. Facebook, Inc., 581 F. Supp. 3d 34, 51 (D.D.C. 2022).
62 United States v. Grinnell Corp., 384 U.S. 563, 570-71 (1966).
63 See, e.g., Daniel Francis, Making Sense of Monopolization, 84 ANTITRUST L.J. 779, 779-80 (2022).
64 Elhauge, supra note 42, at 263.
65 DEP’T OF JUST., COMPETITION AND MONOPOLY: SINGLE-FIRM CONDUCT UNDER SECTION 2 OF THE SHERMAN ACT 33
(2008) (withdrawn in 2009) [hereinafter “DOJ MONOPOLIZATION REPORT”].
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govern specific categories of conduct, along with a burden-shifting framework that is similar to
the usual rule-of-reason inquiry in Section 1 cases.
The following sections review efforts to develop a unified theory of monopolization and several
of the conduct-specific tests that courts have adopted in place of such a theory.
The Debate over a General Monopolization Standard
Courts have held that a wide range of behavior can violate Section 2 of the Sherman Act. As discussed below, a
monopolist can—depending on the circumstances—violate Section 2 by entering into exclusive contracts with
customers or suppliers, tying or bundling separate products, aggressively cutting prices to deter entry, or refusing
to deal with competitors. Other conduct can also constitute monopolization even if it does not fall neatly into any
particular doctrinal category. See LePage’s, Inc. v. 3M, 324 F.3d 141, 152 (3d Cir. 2003). This diversity has raised a
question: is there a unifying principle that explains when conduct will qualify as “exclusionary,” as opposed to
representing legitimate “competition on the merits”?
Commentators have proposed different answers. One option—the “profit sacrifice” or “no economic sense”
test—comes in several varieties. The basic idea, however, is that conduct is “exclusionary” only if it would have no
rational purpose other than to exclude rivals. SULLIVAN, ET AL., supra note 26, at 112.
Under the “profit sacrifice” version of this theory, unilateral conduct would be deemed anticompetitive only if it
entails a sacrifice of short-term profits, which the defendant intends to recoup with monopoly prices after
eliminating its rivals. Id. The “no economic sense” variant is potentially broader. It would condemn conduct that
(1) has a tendency to eliminate competition, and (2) would make no economic sense but for that tendency.
Gregory J. Werden, Identifying Exclusionary Conduct Under Section 2: The “No Economic Sense” Test, 73 ANTITRUST L.J.
413, 418 (2006).
These approaches are motivated by a desire to avoid chilling procompetitive behavior and may offer greater
certainty than the types of balancing tests employed in some monopolization cases. The “profit sacrifice” test has
been criticized for failing to account for cases of costless or cheap exclusion, where a monopolist can exclude
rivals at little expense. While the “no economic sense” test may avoid this objection, some commentators have
faulted it for failing to capture conduct that causes serious anticompetitive harm while creating minor economic
benefits. SULLIVAN, ET AL., supra note 26, at 115. Neither test has been adopted as a general monopolization
standard, but their influence is particularly clear in the doctrine governing predatory pricing and refusals to deal.
An alternative approach would provide that conduct is “exclusionary” if and only if it is likely to exclude from the
defendant’s market an equally or more efficient competitor. RICHARD A. POSNER, ANTITRUST LAW 194-95 (2d. ed.
2001). Like the “profit sacrifice” and “no economic sense” theories, the “equally efficient competitor” test may
avoid the uncertainties that accompany open-ended balancing tests, while still protecting a monopolist’s efficient
rivals. The test’s critics have argued that competition from less efficient rivals is often desirable, including in cases
where an upstart firm has not yet acquired the scale or expertise to match the incumbent’s efficiency.
Administering this approach may also prove challenging, especially in cases that do not involve price predation.
DOJ MONOPOLIZATION REPORT, supra note 65, at 44. While the test is grounded in principles from
predatory-pricing cases, it has not been elevated to the status of a general Section 2 standard.
A third theory involves the type of balancing test alluded to above, which is similar to the usual rule-of-reason
inquiry under Section 1. Under this approach, conduct qualifies as “exclusionary” based on its net effect on
consumer welfare. Steven C. Salop, Exclusionary Conduct, Effect on Consumers, and the Flawed Profit-Sacrifice Standard,
73 ANTITRUST L.J. 311, 330 (2006). Because it entails a totality-of-the-circumstances inquiry into competitive harm,
a balancing test may avoid the allegations of underinclusiveness that have been leveled against alternative
approaches. On the other hand, commentators have criticized open-ended balancing for being administratively
costly and making it difficult for firms to predict whether their behavior is permissible, which may deter
procompetitive conduct. DOJ MONOPOLIZATION REPORT, supra note 65, at 37-38. Many courts have employed an
effects-balancing framework in Section 2 cases, but—like other theories—it has not risen to the level of an
all-purpose test. ANTITRUST DEVELOPMENTS, supra note 55, at 325.
Predatory Pricing
Some monopolization cases involve allegations that a defendant aggressively cut prices in an
attempt to exclude rivals from the market—a practice commonly known as predatory pricing.
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Predation has been described as “a play in two acts.”66 In the first stage of a predation scheme, a
firm charges unsustainably low prices to drive rivals from the market or deter entry.67 In the
second, the firm attempts to recoup the losses incurred in the first stage by raising prices to
monopoly levels.68
Predatory pricing has played a notable role in antitrust history and was a part of the federal
government’s landmark monopolization case against the Standard Oil Company, which was
broken up in 1911.69 The practice was also a common target of antitrust enforcement through the
1960s,70 when some courts evaluated predation claims by focusing on whether the defendant
intended to harm rivals.71
Today, matters are different. Beginning in the 1950s, academics affiliated with what came to be
known as the Chicago School of antitrust analysis mounted a critique of prevailing theories of
predatory pricing.72 They claimed, among other things, that predation is typically an irrational
strategy, because monopoly prices charged during the recoupment period will often invite entry,
which will in turn drive prices down to competitive levels.73 Chicago School scholars also
contended that monopolists will usually suffer greater losses from a price war than their
competitors, because large firms tend to make more sales than smaller ones.74 Other academics
from what is often called the modern Harvard School later offered arguments for a less
interventionist posture that were grounded in institutional concerns about the ability of courts to
distinguish predatory pricing from vigorous price competition.75
These criticisms proved highly influential.76 In the 1970s and 1980s, many lower courts took a
more restrictive approach to predation claims, often requiring plaintiffs to show that the
defendant’s prices fell below its costs rather than inquiring into the defendant’s intent.77 The
Supreme Court ultimately ratified this approach in its 1993 Brooke Group decision, which held
that predation plaintiffs must establish that (1) the defendant charged below-cost prices, and
(2) there is a “dangerous probability” that the defendant will recoup its losses by raising prices
upon the elimination of competitors.78
66 FRANCIS & SPRIGMAN, supra note 26, at 341.
67 Id.
68 Id.
69 Standard Oil Co. v. United States, 221 U.S. 1 (1911).
70 William E. Kovacic, The Intellectual DNA of Modern U.S. Competition Law for Dominant Firms: The
Chicago/Harvard Double Helix, 2007 COLUM. BUS. L. REV. 1, 44 (2007).
71 Elhauge, supra note 42, at 268 & n.47 (collecting cases).
72 See, e.g., ROBERT H. BORK, THE ANTITRUST PARADOX: A POLICY AT WAR WITH ITSELF 149-55 (1978); John S.
McGee, Predatory Price Cutting: The Standard Oil (N.J.) Case, 1 J. L. & ECON. 137 (1958).
73 The Chicago critique is controversial. Economists have identified a variety of circumstances in which predation can,
in theory, be a rational business strategy—for example, where entry entails large fixed costs, a dominant firm develops
a predatory reputation, capital markets are imperfect, or predation can deny rivals minimum efficient scale. CHIARA
FUMAGALLI, ET AL., EXCLUSIONARY PRACTICES: THE ECONOMICS OF MONOPOLISATION AND ABUSE OF DOMINANCE 16-45
(2018).
74 McGee, supra note 72, at 140. Price discrimination can mitigate this effect. For example, a monopolist may be able
to limit its losses from predation by cutting prices only in certain markets. FUMAGALLI, ET AL., supra note 73, at 17.
75 See, e.g., Phillip Areeda & Donald F. Turner, Predatory Pricing and Practices Under Section 2 of the Sherman Act,
88 HARV. L. REV. 697 (1975).
76 One commentator has argued that the Areeda-Turner paper “has a strong claim to be the most influential law review
article ever written on an antitrust topic.” Kovacic, supra note 70, at 45.
77 Id. at 45-50.
78 Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 222-24 (1993).
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These requirements have proven difficult to satisfy. Since the Brooke Group decision, successful
predatory-pricing claims have been rare.79
Refusals to Deal
Another category of potentially exclusionary conduct involves refusals to deal with rivals. In
general, firms—including monopolists—have the right to choose their business partners.80 In
certain cases, however, courts have held that declining to do business with competitors can harm
competition without justification and thus violate the Sherman Act.
In Aspen Skiing Co. v. Aspen Highlands Skiing Corp., for example, the Supreme Court held that a
monopolist of downhill skiing services in Aspen, Colorado violated Section 2 by terminating an
“all-Aspen” ski ticket that it had offered with the plaintiff.81 The defendant also made it difficult
for the plaintiff to replicate the “all-Aspen” package, refusing to sell the plaintiff lift tickets or
accept bank-guaranteed vouchers included in the plaintiff’s replacement ticket package.82 After
concluding that the defendant had failed to offer a plausible efficiency justification for its
conduct, the Supreme Court affirmed a verdict of Section 2 liability.83
However, the Court later cabined the scope of its decision in Aspen Skiing, explaining that the
case lies “at or near the outer boundary” of monopolization law.84 The Court offered this guidance
in Verizon Communications Inc. v. Trinko, in which it held that Verizon did not violate Section 2
by refusing to provide interconnection services to a rival local telephone service provider.85 The
Court distinguished Aspen Skiing on the ground that the monopolist in the latter decision had
terminated “a voluntary (and thus presumably profitable) course of dealing” with the plaintiff,
which suggested a willingness to sacrifice short-term profits for an anticompetitive end.86 The
Court also emphasized that the monopolist in Aspen Skiing refused to deal with its rival even if
compensated at the prices it charged to other customers, which also revealed an anticompetitive
purpose.87 Because those factors were not present in Trinko, the Court held that Verizon’s conduct
did not fall within Aspen Skiing’s “limited exception” to the principle that firms are free to refuse
to deal with their competitors.88
Based on the Supreme Court’s reasoning in Trinko, some lower courts have concluded that
refusal-to-deal plaintiffs must establish that a defendant’s refusal entailed a sacrifice of short-term
79 SULLIVAN, ET AL., supra note 26, at 121; DEVLIN, supra note 10, at 184; Lina M. Khan, Amazon’s Antitrust Paradox,
126 YALE L.J. 710, 730 & n.107 (2017) [hereinafter “Khan, Amazon’s Antitrust Paradox”].
80 See United States v. Colgate & Co., 250 U.S. 300 (1919).
81 472 U.S. 585, 593-94 (1985).
82 Id.
83 Id. at 608-11.
84 Verizon Commc’ns Inc. v. L. Offs. of Curtis V. Trinko, LLP, 540 U.S. 398, 409 (2004).
85 Id. at 409-16.
86 Id. at 409.
87 Id.
88 Id.
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profits for an exclusionary purpose.89 Some courts have also required plaintiffs to establish this
type of profit sacrifice with proof that the defendant terminated a voluntary course of dealing.90
Many circuit courts have also accepted a specific theory of refusal-to-deal liability called the
“essential facilities” doctrine, which the Supreme Court has declined to either recognize or
repudiate.91 To prevail under the essential-facilities doctrine, plaintiffs must establish
1.
2.
3.
4.
the control of an “essential facility” by a monopolist;
an inability to “practically or reasonably” duplicate the facility;
the denial of the use of the facility to a competitor; and
the feasibility of providing access to the facility.92
While that doctrine remains on the books as a formal matter,93 two commentators have described
the Supreme Court’s treatment of it as inflicting “death by dicta.”94 Its viability thus remains
uncertain.
Refusal-to-deal doctrine implicates a well-recognized trade-off. On the one hand, compulsory
dealing will often increase static efficiency. Requiring a vertically integrated monopolist to supply
necessary inputs to downstream rivals, for example, may promote price competition in the
downstream market and thereby eliminate allocative inefficiencies.95 Those benefits, however,
may come at the expense of dynamic competition insofar as they reduce incentives to invest and
innovate.96
As Trinko makes clear, antitrust doctrine currently places greater emphasis on the latter concern.97
The Supreme Court has also expressed skepticism about the institutional competence of courts to
craft appropriate remedies in refusal-to-deal cases. The worry is that compulsory dealing will
often require generalist judges to set prices and other contract terms—tasks that are typically the
province of a sectoral regulator.98
89 E.g., Novell, Inc. v. Microsoft Corp., 731 F.3d 1064, 1075 (10th Cir. 2013) (Gorsuch, J.); Covad Commc’ns Co. v.
Bell Atl. Corp., 398 F.3d 666, 675 (D.C. Cir. 2005); but see Viamedia Inc. v. Comcast Corp., 951 F.3d 429, 462
(7th Cir. 2020) (concluding that profit sacrifice is relevant but not always dispositive for refusal-to-deal liability).
90 E.g., FTC v. Qualcomm, Inc., 969 F.3d 974, 993-94 (9th Cir. 2020); Novell, 731 F.3d at 1075; In re Elevator
Antitrust Litig., 502 F.3d 47, 52 (2d Cir. 2007); Covad Commc’ns Co. v. BellSouth Corp., 374 F.3d 1044, 1049 (11th
Cir. 2004).
91 Trinko, 540 U.S. at 410-11.
92 MCI Commc’ns Corp. v. AT&T Co., 708 F.2d 1081, 1132-33 (7th Cir. 1983).
93 See ELHAUGE, supra note 38, at 353 n.91 (collecting circuit court decisions recognizing the doctrine).
94 Brett Frischmann & Spencer Weber Waller, Revitalizing Essential Facilities, 75 ANTITRUST L.J. 1, 3 (2008); see also
HERBERT HOVENKAMP, FEDERAL ANTITRUST POLICY: THE LAW OF COMPETITION AND ITS PRACTICE 337 (4th ed. 2011)
[hereinafter “HOVENKAMP, FEDERAL ANTITRUST POLICY”] (concluding that “[n]ot many essential facility claims will
survive” post-Trinko); Khan, Amazon’s Antitrust Paradox, supra note 79, at 801 (noting that commentators have
wondered whether the essential-facilities doctrine is now “a dead letter”).
95 Howard A. Shelanski, Unilateral Refusals to Deal in Intellectual and Other Property, 76 ANTITRUST L.J. 369, 371
(2009).
96 Id.
97 Verizon Commc’ns Inc. v. L. Offs. of Curtis V. Trinko, LLP, 540 U.S. 398, 407-08 (2004) (“Firms may acquire
monopoly power by establishing an infrastructure that renders them uniquely suited to serve their customers.
Compelling such firms to share the source of their advantage is in some tension with the underlying purpose of antitrust
law, since it may lessen the incentive for the monopolist, the rival, or both to invest in those economically beneficial
facilities.”).
98 Id. at 408.
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As discussed below, in many cases, permissive refusal-to-deal doctrine has significant
implications for the viability of antitrust action against major tech platforms under existing law.
Tying
Tying arrangements are vertical restraints of trade (i.e., restraints involving individuals or firms in
a customer-supplier relationship) that can be challenged under several provisions of the antitrust
laws, including Sections 1 and 2 of the Sherman Act.99 Tying involves a refusal to sell one
product (the tying product) unless buyers also purchase another product (the tied product) from
the seller.100
The basic concern with tying arrangements is that they may allow a firm with market power for
the tying product to harm competition in and even monopolize the tied product market.101 Tying
may also help a dominant firm preserve a monopoly in the tying market by eliminating potential
rivals that may enter via the tied market.102
However, tying can also produce procompetitive benefits. For example, tying may dissuade
consumers from using an inferior substitute to the tied product with the tying product, mitigating
the risk of reputational damage to a seller’s brand.103 Producing and selling different products
together may also reduce production, marketing, and distribution costs.104
Some ties can also serve as a means of price discrimination—for example, by allowing firms to
discriminate between high-intensity and low-intensity users of a product.105 Commentators have
debated the effects of these “requirements” or “variable proportion” ties, whereby consumers
purchase a durable tying product (e.g., a printer) and amounts of the tied product (e.g., ink) that
vary with their use of the tying product. Firms may employ these types of ties to lower the price
of the tying product and raise the price of the tied product, benefitting low-volume users and
harming high-volume users.106 Some commentators have argued that “requirements ties” typically
increase total and consumer welfare,107 while others have come to the opposite conclusion.108
Like predatory-pricing doctrine, tying law has changed significantly over the course of antitrust
history. Throughout much of the 20th century, courts were highly skeptical of tying arrangements,
99 HOVENKAMP, FEDERAL ANTITRUST POLICY, supra note 94, at 435.
100 Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2 (1984).
101 FUMAGALLI, ET AL., supra note 73, at 352.
102 Id. at 386-88.
103 ELHAUGE, supra note 38, at 419.
104 FUMAGALLI, ET AL., supra note 73, at 353.
105 Dennis W. Carlton & Michael Waldman, Tying, in 3 ISSUES IN COMPETITION LAW AND POLICY 1859, 1866 (Wayne
Dale Collins ed., 2008).
106 Erik Hovenkamp & Herbert J. Hovenkamp, Tying Arrangements and Antitrust Harm, 52 ARIZ. L. REV. 925, 951-52
(2010).
107 Id. at 925. One observer has analogized certain conduct in tech markets to requirements ties, arguing that restrictions
on app distribution may allow Apple to cut iPhone prices, meaning high-intensity app users effectively subsidize
low-intensity users. Thomas A. Lambert, Addressing Big Tech’s Market Power: A Comparative Institutional Analysis,
75 SMU L. REV. 73, 104 & n.182 (2022).
108 Einer Elhauge, Rehabilitating Jefferson Parish: Why Ties Without a Substantial Foreclosure Share Should Not Be
Per Se Legal, 80 ANTITRUST L.J. 463, 476-86 (2016).
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which were deemed per se illegal under Section 1 of the Sherman Act.109 During this period of
disapproval, the Supreme Court consistently described tying as inherently anticompetitive.110
As in other areas of antitrust, academic work challenged this attitude. Beginning in the 1950s,
Chicago School scholars criticized the theory that a firm could leverage power in one market to
extract additional profits from another market. They argued that when consumers use
complementary products in fixed proportions—for example, nuts and bolts—a monopolist cannot
extract additional profits by tying one product to the other.111 In such cases, they reasoned, there
is one profit-maximizing price for the product set, meaning a monopolist of nuts could extract
only one monopoly profit from the nut-bolt set. If the market for bolts is competitive, charging a
monopoly price for nuts while tying them to bolts sold at a supra-competitive price would result
in a price for the nut-bolt set that exceeds the profit-maximizing level.112 The Chicago critique of
leverage theory thus contended that, in these circumstances, firms likely employ tying
arrangements because they generate efficiencies.113
The single monopoly profit theory (SMPT) described above applies only under certain restrictive
assumptions.114 In addition to being limited to complementary products used in fixed
proportions,115 the SMPT does not eliminate the possibility that a firm may employ a tying
arrangement to impair the efficiency of rivals in the tied market. If there are necessary scale
economies in the tied market, for example, tying can potentially allow a firm to deny those
economies to rivals and thus decrease the competitiveness of that market.116 The SMPT also does
not preclude the use of a tying arrangement to maintain market power in the tying market (i.e., in
cases where firms may enter the tying market via the tied market).117
Despite these limitations, the Chicago critique of traditional leverage theory—along with the
development of various efficiency-based rationales for tying—ultimately led courts to move away
from the view that ties are almost invariably anticompetitive.118 This change prompted an erosion
of the per se rule. In decisions in the 1970s and 1980s, the Supreme Court retained the label of
per se illegality for tying arrangements, but limited the rule’s application to firms with sufficient
market power in the tying market to force purchases of the tied product.119
109 N. Pac. Ry. Co. v. United States, 356 U.S. 1, 3 (1958).
110 Fortner Enters. v. U.S. Steel Corp., 394 U.S. 495, 503 (1969) (stating that tying arrangements “generally serve no
legitimate business purpose that cannot be achieved in some less restrictive way”); Standard Oil Co. v. United States,
337 U.S. 293, 305-06 (1949) (concluding that tying arrangements “serve hardly any purpose beyond the suppression of
competition”).
111 Ward S. Bowman, Jr., Tying Arrangements and the Leverage Problem, 67 YALE L.J. 19, 23 (1957).
112 Id.
113
Id. at 29.
114 FUMAGALLI, ET AL., supra note 73, at 367-99.
115 As discussed, commentators have taken different views on the welfare effects of ties involving products used in
variable proportions.
116 Einer Elhauge, Tying, Bundling, and the Death of the Single Monopoly Profit Theory, 123 HARV. L. REV. 397, 413
(2009).
117 Id. at 417-19.
118 Ill. Tool Works Inc. v. Independent Ink, Inc., 547 U.S. 28, 35-36 (2006) (noting that “[o]ver the years,” the Court’s
“strong disapproval of tying arrangements has substantially diminished,” and that the case law had rejected the
assumption that tying arrangements usually have no procompetitive purpose).
119 Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 13-16 (1984); U.S. Steel Corp. v. Fortner Enters., Inc., 429
U.S. 610, 620-22 (1977).
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Lower courts have adopted different formulations of this modified per se rule, but the inquiries
are generally similar.120 One commentator has summarized the doctrine as establishing the
following requirements for a per se tying claim under Section 1:
1. The defendant offered two distinct products;
2. The defendant conditioned the sale of one product (the tying product) on the
purchase of the other product (the tied product);
3. The defendant possessed sufficient economic power in the tying product market
to coerce purchasers into acceptance of the tied product; and
4. The defendant’s conduct affected a “not insubstantial” amount of interstate
commerce in the tied product (an inquiry that focuses on the absolute dollar
amount of affected commerce).121
Some lower courts have also required plaintiffs to demonstrate that a tying arrangement had
anticompetitive effects in the tied product market.122 Others have entertained and accepted
business justifications for challenged ties.123 In practice, then, the modified per se rule against
tying appears to be more similar to the rule of reason than it is to traditional per se rules.124
Courts have also declined to apply the modified per se rule to ties involving platform software
products. In its 2001 decision in United States v. Microsoft, the D.C. Circuit held that a tie
involving Microsoft’s Windows operating system and its Internet Explorer web browser was
governed by the rule of reason, rather than the modified per se rule.125 In rejecting application of
the per se rule, the D.C. Circuit noted that none of the Supreme Court’s tying cases had involved
the physical and technological integration of separate products.126 Condemning such ties without
evaluating their competitive effects, the court reasoned, would create an unacceptable risk of error
and deter innovation.127 In 2023, the Ninth Circuit adopted the D.C. Circuit’s reasoning to
conclude that the rule of reason applied to a tying claim challenging Apple’s requirement that
software developers use Apple’s payment processor for in-app purchases as a condition of
distributing apps through its App Store.128
As mentioned, tying arrangements can be challenged under Sections 1 and 2 of the Sherman Act.
The key differences between the provisions are Section 1’s requirement of an agreement; the
availability of the modified per se rule under Section 1; and Section 2’s requirement that
challenged conduct contribute to the creation or maintenance of monopoly power (or produce a
dangerous probability of those effects).129
120 HOVENKAMP, FEDERAL ANTITRUST POLICY, supra note 94, at 435 (explaining that “[i]n operation the tests are
similar,” but that some courts have combined elements that other courts recognize as separate requirements).
121 Id. The Supreme Court has held that $60,800 in sales was sufficient to meet the “not insubstantial” volume
requirement, while some lower courts have held that considerably lower volumes are sufficient. ANTITRUST
DEVELOPMENTS, supra note 55, at 197 (collecting cases).
122 E.g., Kaufman v. Time Warner, 836 F.3d 137, 141 (2d Cir. 2016); Amey, Inc. v. Gulf Abstract & Title Inc., 758
F.2d 1486, 1503 (11th Cir. 1985); Driskill v. Dallas Cowboys Football Club, Inc., 498 F.2d 321, 323 (5th Cir. 1974).
123 ANTITRUST DEVELOPMENTS, supra note 55, at 200.
124 Viamedia, Inc. v. Comcast Corp., 951 F.3d 429, 468 (7th Cir. 2020) (making this observation).
125 253 F.3d 34, 89-91 (D.C. Cir. 2001) (per curiam).
126 Id.
127 Id.
128 Epic Games, Inc. v. Apple, Inc., 67 F.4th 946, 997 (9th Cir. 2023).
129 FRANCIS & SPRIGMAN, supra note 26, at 382.
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In evaluating product-design or “technological tie” claims under Section 2, some decisions have
held that the integration of separate products is lawful when it improves quality or reduces cost,
even if that conduct forecloses rivals.130 The Microsoft decision, by contrast, employed a
rule-of-reason-like burden-shifting framework to the government’s Section 2 claims in that
case.131 Another appellate decision has affirmed liability for product integration where evidence
of an exclusionary motive cast doubt on the defendant’s argument that the challenged design
represented a genuine improvement.132
Exclusive Dealing
Like tying arrangements, exclusive contracts—in which a firm commits to refrain from dealing
with its counterparty’s rivals—are vertical restraints of trade that can be challenged under
Sections 1 and 2 of the Sherman Act.133
Exclusive contracts can harm competition when a dominant firm uses them to foreclose rivals
from key inputs or distribution channels.134 They can also produce procompetitive benefits. For
example, exclusivity may induce manufacturers to make relationship-specific investments in
dealers by providing sales training, technical support, and other promotional assistance.135 To the
extent that a dealer can use any of this support to promote rival brands, manufacturers may lack
the incentive to provide it. Exclusive dealing can eliminate this free-rider problem and thereby
encourage investment.136 Exclusivity may also mitigate uncertainty about future sales or
purchases137 and encourage more intense competition for distribution, which may result in lower
consumer prices.138
While exclusive dealing has never been deemed per se illegal, its treatment has evolved
considerably. In its 1949 Standard Stations decision, the Supreme Court affirmed a decision
finding that foreclosure of 6.7% of the relevant market was sufficient to render an exclusive
contract illegal.139 In doing so, the Court appeared to approve the lower court’s refusal to engage
in a full rule-of-reason analysis of competitive harm.140 The decision thus stood for what came to
be called the “quantitative substantiality” approach to exclusivity, which focused on the
percentage of the relevant market foreclosed by a challenged agreement.141
The Supreme Court departed from that approach twelve years later in Tampa Electric Co. v.
Nashville Coal Co., where it rejected a challenge to an exclusive contract that foreclosed less than
130 See, e.g., Allied Orthopedic Appliances v. Tyco Health Care Grp., 592 F.3d 991, 1000-02 (9th Cir. 2010); Berkey
Photo, Inc. v. Eastman Kodak Co., 603 F.2d 263, 286-87 (2d Cir. 1979).
131 Microsoft, 253 F.3d at 65-67.
132 C.R. Bard, Inc. v. M3 Systems, 157 F.3d 1340, 1382 (Fed. Cir. 1998).
133 HOVENKAMP, FEDERAL ANTITRUST POLICY, supra note 94, at 478.
134 FUMAGALLI, ET AL., supra note 73, at 239-62.
135 Id. at 273-74.
136 Id.
137 See Standard Oil Co v. United States (Standard Stations), 337 U.S. 293, 306-07 (1949).
138 Benjamin Klein & Kevin M. Murphy, Exclusive Dealing Intensifies Competition for Distribution, 75 ANTITRUST
L.J. 433 (2008). Chicago School academics also questioned why a rational firm would agree to an exclusive contract
that enhanced or preserved the market power of its counterparty. E.g., BORK, supra note 72, at 309. In response,
economists have developed models showing that buyers may face collective action problems when a monopolist uses
exclusive contracts to deny rivals necessary scale economies. FUMAGALLI, ET AL., supra note 73, at 243-54.
139 Standard Stations, 337 U.S. at 308-09.
140 Id.
141 ANTITRUST DEVELOPMENTS, supra note 55, at 209.
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1% of the relevant market.142 In Tampa Electric, the Court did not limit its analysis to the low
foreclosure percentage, explaining that it was necessary to also engage in a qualitative analysis of
the agreement’s competitive effects.143
The quantitative aspect of foreclosure analysis has also become more permissive. In the Court’s
1984 Jefferson Parish decision, the concurring opinion of four Justices concluded, without a
detailed inquiry, that foreclosure of 30% of the market was not sufficient to render an exclusive
contract unlawful.144
Since these decisions, reviewing courts have tended to require foreclosure of at least 40% of the
market before condemning exclusive contracts under Section 1, while also analyzing the duration
of the restrictions, any business justifications, and other factors that may bear on an agreement’s
competitive effects.145
Some courts have indicated that the standards for assessing exclusive dealing are more
plaintiff-friendly under Section 2, and that a monopolist’s use of exclusive contracts may be
illegal even if they foreclose less than the 40% figure that is typically necessary for a Section 1
violation.146
Monopoly Leveraging
A firm’s possession of monopoly power has traditionally given rise to concerns that the firm may use that power
to gain a competitive advantage in another market. For many years, the federal courts split over whether Section 2
precluded this type of “monopoly leveraging” in cases where a defendant utilized its monopoly power to harm
competition in—but not reasonably threaten to monopolize—a second market. Elhauge, supra note 38, at 357-58
nn.97-98 (collecting cases).
In 2004, the Supreme Court rejected one type of leveraging claim, remarking that the leveraging theory offered in
that case would be valid only if the defendant had a “dangerous probability” of monopolizing a second market—an
element of the attempt-to-monopolize offense. Verizon Commc’ns Inc. v. L. Offs. of Curtis V. Trinko, LLP, 540 U.S. 398,
410 n.4 (2004) (citation omitted). The Court thus rejected the proposition that a defendant could violate
Section 2 merely by gaining an unfair advantage in a second market. As a result, “monopoly leveraging” does not
denote a standalone antitrust offense that is distinct from monopolization or attempted monopolization.
In its 2001 Microsoft decision, however, the D.C. Circuit endorsed what some commentators have called a
“defensive leveraging” theory. See United States v. Microsoft Corp., 253 F.3d 34, 67 (D.C. Cir. 2001) (per curiam);
Robin Cooper Feldman, Defensive Leveraging in Antitrust, 87 GEO. L.J. 2079 (1999). While “offensive leveraging”
involves a defendant’s use of monopoly power in one market to extract additional profits from another market,
“defensive leveraging” involves the use of monopoly power to gain an advantage in another market so as to
prevent erosion of a primary monopoly. See Feldman, Defensive Leveraging, 87 GEO. L.J. at 2080.
In Microsoft, for example, the D.C. Circuit concluded that Microsoft had leveraged its operating-system monopoly
into the market for web browsers so as to protect its operating-system monopoly. Microsoft, 253 F.3d at 64.
Specifically, Microsoft imposed several restrictions related to its Windows operating system that were designed to
reduce the usage of rival web browsers, which threatened to supplant Windows as platforms for software
development. Id. at 60. The D.C. Circuit held that some of this conduct constituted unlawful monopolization. Id. at
64.
Accordingly, under current Section 2 doctrine, an “offensive leveraging” theory requires proof that a defendant’s
conduct raised a “dangerous probability” of monopolizing a second market—a prerequisite for an
attempt-to-monopolize claim. Simply gaining an unfair advantage in another market is not sufficient. Trinko, 540
U.S. at 410 n.4. By contrast, “defensive leveraging”—whereby a monopolist’s leveraging of its monopoly power
142 365 U.S. 320 (1961).
143 Id. at 329.
144 466 U.S. 2, 46 (1984) (O’Connor, J., concurring).
145 HOVENKAMP, FEDERAL ANTITRUST POLICY, supra note 94, at 487.
146 E.g., United States v. Microsoft Corp., 253 F.3d 34, 70 (D.C. Cir. 2001) (per curiam).
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into a second market helps preserve its primary monopoly—is a viable theory of monopoly maintenance, even
without proof that the defendant threatens to monopolize the second market. See Microsoft, 253 F.3d at 64, 80-84.
Mergers & Acquisitions
The antitrust laws also place limitations on mergers and acquisitions.147 Section 7 of the Clayton
Act prohibits a merger if its effect “may be substantially to lessen competition, or to tend to create
a monopoly.”148 Though less common, Section 2 of the Sherman Act has also been used to
challenge mergers that help a firm acquire or maintain monopoly power.149
Analysis of mergers varies based on the relationship between the merging parties—specifically,
based on whether a merger is horizontal, vertical, or conglomerate.
Horizontal mergers (i.e., mergers between competitors) receive the greatest scrutiny and can raise
two primary types of concerns. First, horizontal mergers may allow a firm to unilaterally increase
its prices or decrease the quality of its products by eliminating competition between rivals.150
Second, horizontal mergers may facilitate tacit or express collusion by increasing market
concentration (so-called “coordinated effects”).151
Vertical mergers (i.e., mergers between firms in the same supply chain) receive less exacting
scrutiny than horizontal ones, because they do not eliminate direct competitors and are thought to
often generate efficiencies.152 The main concern with vertical mergers is foreclosure; when a firm
acquires an important source of inputs or a key distribution channel, it may have the ability and
incentive to raise rivals’ costs or refuse to do business with rivals altogether.153 A vertical merger
may also prompt concerns if it gives a firm access to competitively sensitive information about
rivals or facilitates collusion by allowing the merged entity to monitor compliance with tacit
pricing agreements.154
Conglomerate mergers are mergers that are neither horizontal nor vertical.155 Challenges to such
mergers are rare.156 Conglomerate mergers may raise antitrust concerns, however, if they allow a
firm to acquire a potential competitor.157
147 For ease of discussion, this report will refer to both mergers and acquisitions as “mergers.”
148 15 U.S.C. § 18.
149 United States v. Grinnell Corp., 384 U.S. 563, 576 (1966); Fraser v. Major League Soccer, LLC, 284 F.3d 47, 61
(1st Cir. 2002); BRFHH Shreveport, LLC v. Willis Knighton Med. Ctr., 176 F. Supp. 3d 606, 619 (W.D. La. 2016).
150 HORIZONTAL MERGER GUIDELINES, supra note 49, at § 6.
151 Id. § 7.
152 DANIEL A. CRANE, ANTITRUST 164 (2014). By allowing a downstream firm to access inputs at cost instead of paying
a markup, vertical mergers may eliminate the “double marginalization” that occurs when two firms within a supply
chain each mark-up their prices. DEP’T OF JUST. & FED. TRADE COMM’N, VERTICAL MERGER GUIDELINES § 6 (2020)
[hereinafter “VERTICAL MERGER GUIDELINES”] (withdrawn by the FTC in September 2021). The elimination of double
marginalization is a key procompetitive benefit that is often cited in defense of vertical mergers. See id.
153 VERTICAL MERGER GUIDELINES, supra note 152, at § 4.
154 Id. §§ 4-5.
155 ELHAUGE, supra note 38, at 811.
156 Id. at 812.
157 The elimination of potential competition is sometimes described as a horizontal theory of harm, because it involves
the claim that a potential competitor would likely enter the relevant market or that market participants perceive the
potential competitor as being likely to enter their market. CHRISTOPHER L. SAGERS, ANTITRUST 321 n.45 (3d ed. 2021).
As discussed below, however, challenges based on these theories are evaluated under different standards than
challenges to other types of horizontal mergers.
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Merger law has evolved significantly over the last 50 years. During the Warren Court era from the
early 1950s through the 1960s, the Supreme Court heard 12 merger cases, siding with the plaintiff
in each case where it reached the merits.158 Some of the Court’s decisions blocked small mergers
in unconcentrated markets, based in part on a concern about stopping an incipient trend toward
concentration and a desire to effectuate congressional intent to protect small businesses.159
In this period, courts were heavily influenced by an approach to industrial organization often
called the “structure-conduct-performance” (SCP) paradigm, which held that market
concentration tended to produce less competitive markets with higher prices.160 The impact of
these theories was made clear in the Supreme Court’s 1963 decision in United States v.
Philadelphia National Bank, which recognized a presumption of illegality for mergers that would
result in a firm controlling “an undue percentage share of the relevant market” while significantly
increasing market concentration.161
This “structural presumption” remains good law, but subsequent developments have chipped
away at its strength. In its 1974 decision in United States v. General Dynamics Corp., the
Supreme Court held that the defendant coal-mine operator had successfully rebutted the
presumption with evidence that almost all of the acquired firm’s coal reserves were depleted or
committed under long-term contracts.162 Lower court decisions later interpreted General
Dynamics as demanding a more detailed inquiry into a merger’s competitive effects than was
evident in the Warren Court’s merger decisions.163 This shift coincided with a wave of academic
criticism directed at SCP theories. Among other things, SCP’s detractors argued that high levels
of market concentration are often necessary for firms to achieve economies of scale and scope
and that many concentrated markets perform competitively.164
Today, much of the action in merger enforcement takes place in the antitrust agencies rather than
the courts. This is partly the result of Congress’s adoption of the Hart-Scott-Rodino Antitrust
Improvements Act (HSR Act) in 1976, which created a pre-merger notification regime that allows
the DOJ and FTC to review mergers exceeding certain numerical thresholds before they close.165
Since 1968, the agencies have published guidelines outlining their analytical approach to merger
review, including their application of the structural presumption.166 Starting with the 1982
guidelines, the agencies have relied on the Herfindahl-Hirschman Index (HHI) measure of market
158 Eleanor Fox, Antitrust, Mergers, and the Supreme Court: The Politics of Section 7 of the Clayton Act, 26 MERCER L.
REV. 389, 396-97 (1975).
159 E.g., United States v. Von’s Grocery Co., 384 U.S. 270, 278 (1966) (blocking a merger that would have resulted in
the merged firm occupying a 7.5% market share, based on a concern “that a market marked . . . by both a continuous
decline in the number of small businesses and a large number of mergers would slowly but inevitably gravitate from a
market of many small competitors to one dominated by one or a few giants”); Brown Shoe Co. v. United States, 370
U.S. 294, 343-44 (1962) (blocking a merger with both horizontal and vertical elements, based in part on the fact that
the integrated firm would be able to offer lower prices than unintegrated firms); see also FTC v. Procter & Gamble Co.,
386 U.S. 568, 579 (1967) (unwinding a conglomerate transaction involving a large consumer-goods firm and the
leading producer of household liquid bleach, based in part on a concern that economies of scope would disadvantage
smaller rivals).
160 William E. Kovacic & Carl Shapiro, Antitrust Policy: A Century of Economic and Legal Thinking, 14 J. ECON.
PERSP. 43, 52 (2000).
161 374 U.S. 321, 363-64 (1963).
162 415 U.S. 486, 508-11 (1974).
163 SULLIVAN, ET AL., supra note 26, at 464 n.76 (citing examples).
164 HOVENKAMP, FEDERAL ANTITRUST POLICY, supra note 94, at 544.
165 P.L. 94-435, 90 Stat. 1383 (1976).
166 In Philadelphia National Bank, the Supreme Court held that the presumption was triggered by a post-merger market
share of 30%. 370 U.S. at 364. The Court did not address market-concentration thresholds, however.
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concentration in applying the presumption.167 Revisions to the guidelines in 2010 increased the
minimum concentration levels at which the agencies regard horizontal mergers as potentially
problematic.168 While the guidelines are not legally binding, courts often treat them as persuasive
authority and appear to accord some significance to the relevant HHI thresholds.169
As discussed, the structural presumption can be rebutted—for example, with evidence that the
proposed market is poorly defined or that market shares do not reflect a merger’s likely
competitive effects; that the entry of other firms will discipline any pricing power; or that the
merger will produce efficiencies that offset any anticompetitive effects.170 Upon rebuttal of a
prima facie case, the burden of producing further evidence of anticompetitive harm shifts back to
the plaintiff and merges with the burden of persuasion.171
While the case law on vertical mergers is sparse,172 the most recent appellate decision reviewing a
vertical deal employed a burden-shifting approach that is similar to the framework used to
evaluate horizontal mergers.173 However, the court indicated that plaintiffs challenging vertical
mergers cannot rely on the structural presumption to discharge their initial burden.174 Instead, the
court explained that such plaintiffs must make a fact-specific showing that a transaction is likely
to be anticompetitive,175 which will presumably often involve foreclosure concerns.
The current state of merger law is something of an oddity. Although the Supreme Court’s 1960s
merger decisions have not been formally overturned, they do not accurately reflect the “law on
the ground” as applied by the antitrust agencies and the lower courts.176 Since the Warren Court,
for example, merger doctrine has abandoned “non-economic” goals like the protection of small
businesses.177 While structural evidence continues to play a role in merger analysis, its centrality
167 FRANCIS & SPRIGMAN, supra note 26, at 423. The HHI is a measure of market concentration calculated by summing
the squares of each firm’s market share. Thus, a market with four firms that each occupy 25% of the market would
have an HHI of 2,500 (252 + 252 + 252 + 252).
168 Id.
169 SULLIVAN, ET AL., supra note 26, at 500 n.41 (collecting cases).
170 Herbert J. Hovenkamp & Carl Shapiro, Horizontal Mergers, Market Structure, and Burdens of Proof, 127 YALE L.J.
1996, 1997 (2018). The availability of an efficiencies defense in merger cases is not entirely settled. In the 1960s, the
Supreme Court explicitly rejected such a defense and sometimes identified efficiencies as a reason to block mergers.
See FRANCIS & SPRIGMAN, supra note 26, at 494-95. More recently, though, some lower courts have indicated that
evidence of efficiencies can be used to rebut a prima facie showing of competitive harm. Id. at 496 n.688 (collecting
cases). The merger guidelines also provide that certain merger-specific efficiencies may be cognizable. HORIZONTAL
MERGER GUIDELINES, supra note 49, at § 10 (“The Agencies will not challenge a merger if cognizable efficiencies are
of a character and magnitude such that the merger is not likely to be anticompetitive in any relevant market.”). To date,
however, no federal court of appeals has concluded that evidence of efficiencies was sufficient to rebut a prima facie
case of anticompetitive effects. FRANCIS & SPRIGMAN, supra note 26, at 499.
171 Baker Hughes, 908 F.2d at 983.
172 In 2018, the DOJ’s challenge to AT&T’s acquisition of Time Warner became the first vertical transaction litigated
to judgment since the 1970s. Fruehauf Corp. v. FTC, 603 F.3d 345 (2d Cir. 1979).
173 United States v. AT&T, Inc., 916 F.3d 1029, 1032 (D.C. Cir. 2019).
174 Id.
175 Id.
176 SULLIVAN, ET AL., supra note 26, at 466 (noting the “quasi-irrelevance” of the Supreme Court in merger law). The
Supreme Court has not issued a merits opinion in a merger case since 1975. United States v. Citizens & S. Nat’l Bank,
422 U.S. 86 (1975).
177 HERBERT HOVENKAMP, THE ANTITRUST ENTERPRISE: PRINCIPLE AND EXECUTION 208 (2005) [hereinafter
“HOVENKAMP, ANTITRUST ENTERPRISE”] (“While antitrust casebooks continue to print 1960s-vintage merger decisions
that have never been overruled, no one, not even federal judges and certainly not the government enforcement agencies,
pay much attention to them. . . . It is not merely that Supreme Court decisions are not followed on technical grounds—
(continued...)
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has diminished as regulators and courts also consider a broader range of factors that may
illuminate a transaction’s competitive effects.178 That may be changing, however. In 2023, the
DOJ and FTC released draft merger guidelines that appear to place more weight on structural
considerations than previous iterations of the guidelines.179 It remains to be seen whether courts
will follow the agencies in this regard, should the regulators finalize the guidelines in similar
form.
Mergers Involving Potential Competitors
Some mergers involve firms that do not compete at the time of the transaction, but may compete in the future
absent the merger. These mergers between potential competitors can raise two types of concerns. First, if the
perception that a potential competitor may enter a market constrains a firm’s pre-merger pricing behavior, then
allowing the firm to acquire the potential competitor eliminates that constraint. In the doctrine, this concern is
known as the elimination of “perceived potential competition.” Second, if a potential competitor actually would
have entered the relevant market, then a merger would eliminate actual future competition, irrespective of
whether the potential competitor constrained pre-merger behavior. This concern is called the elimination of
“actual potential competition.”
The Supreme Court has held that the elimination of perceived potential competition may render a merger
unlawful, but has not expressly recognized the elimination of actual potential competition as a viable theory of
harm. United States v. Marine Bancorporation, Inc., 418 U.S. 602, 624-25 (1974). The Court has identified several
requirements for a perceived-potential-competition claim. A plaintiff bringing such a claim must show that
•
the relevant market is highly concentrated;
•
the potential competitor has the “characteristics, capabilities, and economic incentive to render it a perceived
potential de novo entrant”; and
•
the potential competitor “in fact tempered oligopolistic behavior” by market participants.
Id. While the Supreme Court has declined to resolve the validity of the actual-potential-competition doctrine, it
has explained that plaintiffs relying on that theory must establish that
•
the relevant market is highly concentrated;
•
the potential competitor has “feasible means” of entry other than through the merger; and
•
the potential competitor’s entry offers a “substantial likelihood” of deconcentrating the market or producing
other significant procompetitive benefits.
Id. at 633. Lower courts have adopted different evidentiary requirements in analyzing whether a firm is likely to
enter the market absent a challenged transaction. The Fourth Circuit demands “clear proof” of entry but for the
merger. FTC v. Atlantic Richfield Co., 549 F.2d 289, 294-95 (4th Cir. 1977). Others have required that the potential
competitor “probably” or “would likely” enter the relevant market. Tenneco, Inc. v. FTC, 689 F.2d 346, 352 (2d Cir.
1982) (“would likely”); Yamaha Motor Co. v. FTC, 657 F.2d 971, 977 (8th Cir. 1981) (“probably”). Another has
demanded a “reasonable probability” of entry, which the court construed to be more demanding than a
“probability” or “more likely than not” test. Mercantile Tex. Corp. v. Bd. of Govs. of the Fed. Res. Sys., 638 F.2d 1255,
1268-69 (5th Cir. 1981).
The impact of potential-competition doctrine has been fairly modest. Three decisions have found a merger
unlawful based on the perceived-potential-competition theory, all of which also relied on the
actual-potential-competition theory. ANTITRUST DEVELOPMENTS, supra note 55, at 398.
the fundamental ideology of mergers has shifted dramatically over the last three decades and now embodies values that
are inconsistent at the most fundamental level with those that the Supreme Court last articulated.”).
178 HOVENKAMP, FEDERAL ANTITRUST POLICY, supra note 94, at 544.
179 U.S. Antitrust Agencies Propose Sweeping Changes to Merger Guidelines—5 Key Things You Need to Know, WHITE
& CASE LLP (July 20, 2023), https://www.whitecase.com/insight-alert/us-antitrust-agencies-propose-sweepingchanges-merger-guidelines-5-key-things-you. For an overview of the 2023 draft guidelines, see CRS Legal Sidebar
LSB11027, Antitrust Agencies Release Draft Merger Guidelines and Propose HSR Rule Changes, by Peter J. Benson,
Chris D. Linebaugh, and Alexander H. Pepper.
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Theoretical Approaches to Antitrust
As the above discussion makes clear, antitrust doctrine has changed significantly over time, often
in response to shifts in political ideology and economic theory. Congress has played a limited role
in this evolution; the language of the core antitrust statutes has not meaningfully changed since
the Celler-Kefauver Act amended Section 7 of the Clayton Act in 1950.180 Because the flexible
nature of the antitrust laws gives the judiciary broad powers to shape competition policy based on
prevailing economic and political thinking,181 this section provides a brief overview of the leading
theoretical approaches to antitrust and their historical influence.
As discussed, SCP theories exerted a strong influence on antitrust policy in the middle of the 20th
century.182 This approach to industrial organization was developed by scholars working in a
tradition often referred to as the Harvard School, which posited a close causal link between
market concentration, firm conduct, and competitive performance.183 In particular, the SCP
literature held that there was a tight connection between high levels of market concentration and
certain undesirable outcomes, such as high price-cost margins.184
For much of antitrust history—including during the heyday of the SCP paradigm—
“non-economic” goals also played a major role in shaping antitrust doctrine. These goals included
the protection of small businesses, the dispersion of economic power, the preservation of
economic freedom, and the elimination of concentrated political power.185
From the 1940s through the 1960s, structuralist economic theories and the above normative
concerns provided the theoretical architecture for a highly interventionist approach to antitrust,
judged by today’s standards. As discussed, the Warren Court’s merger jurisprudence was quite
restrictive, invalidating small mergers based in part on a desire to “promote competition through
the protection of viable, small, locally owned business,” even if “occasional higher costs and
prices might result from the maintenance of fragmented industries and markets.”186
Conduct cases during this era reflected similar attitudes. In the federal government’s
monopolization case against Alcoa, for example, Judge Learned Hand of the Second Circuit
reasoned that the Sherman Act was motivated in part by a belief that “great industrial
consolidations are inherently undesirable, regardless of their economic results.”187 He thus
construed the statute as an attempt to “put an end to great aggregations of capital because of the
helplessness of the individual before them.”188 Based on these principles, the Second Circuit held
180 Pub. L. No. 81-899, 64 Stat. 1125 (1950).
181 See, e.g., Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 899 (2007) (“From the beginning the
Court has treated the Sherman Act as a common-law statute. . . . Just as the common law adapts to modern
understanding and greater experience, so too does the Sherman Act’s prohibition on ‘restraint[s] of trade’ evolve to
meet the dynamics of present economic conditions.”) (brackets in original); Nat’l Soc’y of Pro. Eng’rs v. United States,
435 U.S. 679, 688 (1978) (explaining that Congress “expected the courts to give shape to [the Sherman Act’s] broad
mandate by drawing on common-law tradition”).
182 See Kovacic & Shapiro, supra note 160, at 52.
183 ROGER VAN DEN BERGH, COMPARATIVE COMPETITION LAW AND ECONOMICS 33-36 (2017).
184 Id. at 35-36.
185 See, e.g., Stucke, supra note 1, at 560-62; Eleanor M. Fox, Modernization of Antitrust: A New Equilibrium, 66
CORNELL L. REV. 1140, 1182 (1981).
186 Brown Shoe Co. v. United States, 370 U.S. 294, 344 (1962).
187 United States v. Aluminum Co. of Am., 148 F.2d 416, 428 (2d Cir. 1945) (Hand, J.).
188 Id.
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that Alcoa violated Section 2 by expanding its capacity in ways that deterred entry.189 In its
Section 1 cases during this period, the Supreme Court likewise condemned a wide range of
conduct as per se illegal.190
The 1970s witnessed a marked shift in theory and doctrine. As discussed, beginning in the 1950s,
lawyers and economists affiliated with what came to be known as the Chicago School challenged
much of prevailing antitrust thinking.191 Chicago School scholars criticized SCP theories on a
variety of grounds. Among other things, they argued that markets tend to self-correct; that high
levels of concentration often reflect growth by the most efficient firms; and that many business
practices that attracted antitrust scrutiny had efficiency-based rationales.192 The Chicago School’s
most influential contribution, however, was its prescription that antitrust should be limited to
promoting economic welfare.193 An antitrust system that instead committed itself to a series of
often-conflicting social objectives, Chicago School scholars claimed, offered no principled
method for distinguishing anticompetitive behavior from permissible conduct.194
Chicago’s empirical claims did not go unchallenged. Scholars working in the “Post-Chicago”
tradition generally embraced the Chicago School’s focus on economic goals, but developed
theories of anticompetitive harm that were not present in the Chicago literature.195 Many of these
Post-Chicago models highlighted the possibility that dominant firms could employ strategic
behavior to raise their rivals’ costs, relying heavily on game theory.196 Another group of
academics from the so-called “modern Harvard School” tended to fall somewhere between the
Chicago School and the ideology of mid-20th century antitrust, focusing on the administrability
of antitrust doctrine and the institutional limitations of courts.197 Like Post-Chicago scholars, the
modern Harvard School endorsed the Chicago view that the ultimate purpose of the antitrust laws
is to promote economic welfare.198 The three approaches differ primarily in their empirical claims
about market functioning and the competence of courts to remedy market failures.199
In general, the Chicago School and the modern Harvard School have had the greatest impact on
the shape of current doctrine.200 Since the 1970s, the Supreme Court has overturned several
189 Id. at 431 (“It was not inevitable that [Alcoa] should always anticipate increases in the demand for ingot and be
prepared to supply them. Nothing compelled it to keep doubling and redoubling its capacity before others entered the
field. It insists that it never excluded competitors; but we can think of no more effective exclusion than progressively to
embrace each new opportunity as it opened, and to face every newcomer with new capacity already geared into a great
organization, having the advantage of experience, trade connections and the elite of personnel.”).
190 E.g., United States v. Topco Assocs., Inc., 405 U.S. 596 (1972) (joint venture involving territorial restraints);
Albrecht v. Herald Co., 390 U.S. 145 (1968) (maximum resale price maintenance); United States v. Arnold, Schwinn &
Co., 388 U.S. 365 (1967) (vertical territorial restraints); International Salt Co., Inc. v. United States, 332 U.S. 392
(1947) (tying).
191 See, e.g., Herbert Hovenkamp & Fiona Scott Morton, Framing the Chicago School of Antitrust Analysis, 168 U. PA.
L. REV. 1843 (2020).
192 VAN DEN BERGH, supra note 183, at 45-49.
193 See Richard Schmalensee, Thoughts on the Chicago Legacy in U.S. Antitrust, in HOW THE CHICAGO SCHOOL
OVERSHOT THE MARK: THE EFFECT OF CONSERVATIVE ECONOMIC ANALYSIS ON U.S. ANTITRUST 11, 12-14 (Robert
Pitofsky ed. 2008); RICHARD A. POSNER, ANTITRUST LAW ix (2d ed. 2001).
194 Schmalensee, supra note 193, at 12.
195 Christopher S. Yoo, The Post-Chicago Antitrust Revolution: A Retrospective, 168 U. PA. L. REV. 2145, 2160-61
(2020).
196 Id.
197 HOVENKAMP, ANTITRUST ENTERPRISE, supra note 177, at 37-38, 45-56.
198 Id. at 31.
199 Id.
200 See Kovacic, supra note 70.
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decisions establishing per se Section 1 liability for certain categories of conduct201 and
established restrictive standards for various types of monopolization claims.202 Similarly, the
lower courts and the antitrust agencies have de-emphasized structural merger analysis in favor of
more detailed inquiries into the competitive effects of individual transactions.203
Modern antitrust doctrine has also abandoned explicit consideration of “non-economic” goals like
small business protectionism and the sociopolitical effects of concentrated economic power.204
Since the 1970s, the Supreme Court has repeatedly described the antitrust laws as being
principally concerned with the economic welfare of consumers.205 This proposition—often called
the “consumer welfare standard”—has generated an enormous amount of scholarly attention,
especially in recent years. While there is disagreement about what the standard does and should
mean in practice,206 contemporary doctrine clearly recognizes economic welfare as the lodestar of
antitrust analysis.207
Over the past decade or so, this economic orientation has been criticized by a group of academics
and policymakers often described as “Neo-Brandeisians.” Members of this movement have
criticized much of existing antitrust doctrine as unduly permissive and called for increased
201 Leegin Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877 (2007) (minimum resale price maintenance); State
Oil Co. v. Khan, 522 U.S. 3 (1997) (maximum resale price maintenance); Cont’l T.V., Inc. v. GTE Sylvania Inc., 433
U.S. 36 (1977) (vertical territorial restraints).
202 Pac. Bell Tel. Co. v. linkLine Commc’ns, Inc., 555 U.S. 438 (2009) (price squeezes); Weyerhaeuser Co. v.
Ross-Simmons Hardwood Lumber Co., 549 U.S. 312 (2007) (predatory buying); Verizon Commc’ns Inc. v. L. Offs. of
Curtis V. Trinko, LLP, 540 U.S. 398 (2004) (refusals to deal); Brooke Grp. Ltd. v. Brown & Williamson Tobacco
Corp., 509 U.S. 209 (1993) (predatory pricing).
203 See, e.g., United States v. Baker Hughes, Inc., 908 F.2d 981 (D.C. Cir. 1990); HORIZONTAL MERGER GUIDELINES,
supra note 49, at § 5.3.
204 See, e.g., Joshua D. Wright & Douglas H. Ginsburg, The Goals of Antitrust: Welfare Trumps Choice, 81 FORDHAM
L. REV. 2405, 2405-06 (2013).
205 NCAA v. Alston, 141 S. Ct. 2141, 2151 (2021); Ohio v. Am. Express Co., 138 S. Ct. 2274, 2284 (2018); Leegin
Creative Leather Prods., Inc. v. PSKS, Inc., 551 U.S. 877, 886 (2007); Weyerhaeuser Co. v. Ross-Simmons Hardwood
Lumber Co., 549 U.S. 312, 324 (2007); Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 224
(1993); Jefferson Par. Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 15 (1984); NCAA v. Bd. of Regents of Univ. of Okla.,
468 U.S. 85, 107 (1984); Reiter v. Sonotone Corp., 442 U.S. 330, 343 (1979); see also John B. Kirkwood & Robert H.
Lande, The Fundamental Goal of Antitrust: Protecting Consumers, Not Increasing Efficiency, 84 NOTRE DAME L. REV.
191, 219-24 (2008) (collecting lower court cases embracing the consumer-welfare standard).
206 There are several issues here. First, Robert Bork—an influential Chicago School academic and later a federal
judge—used the term “consumer welfare” to refer to a “total welfare” standard that focuses on the sum of producer and
consumer surplus, while many commentators instead use the term “consumer welfare” to refer to a standard that
focuses only on consumer surplus. See, e.g., Barak Y. Orbach, The Antitrust Consumer Welfare Paradox, 7 J.
COMPETITION L. & ECON. 133, 142-49 (2010). Both versions of the “consumer welfare” standard have supporters. See
Roger D. Blair & D. Daniel Sokol, Welfare Standards in U.S. and E.U. Antitrust Enforcement, 81 FORDHAM L. REV.
2497 (2013) (favoring a total-welfare standard); Steven C. Salop, Question: What Is the Real and Proper Antitrust
Welfare Standard? Answer: The True Consumer Welfare Standard, 22 LOY. CONSUMER L. REV. 336 (2010) (favoring a
consumer-surplus standard). Second, the extent to which the consumer-welfare standard recognizes harms that sellers
suffer from anticompetitive conduct remains the subject of ongoing discussion. See, e.g., Herbert J. Hovenkamp, Is
Antitrust’s Consumer Welfare Principle Imperiled?, 45 J. CORP. L. 101, 113-15 (2019); C. Scott Hemphill & Nancy L.
Rose, Mergers That Harm Sellers, 127 YALE L.J. 2078 (2018). Third, some commentators have argued that the
consumer-welfare standard does not represent an accurate description of current antitrust doctrine for other reasons.
E.g., Gregory J. Werden, Antitrust’s Rule of Reason: Only Competition Matters, 79 ANTITRUST L.J. 713, 713, 743
(2014) (arguing that “the rule of reason focuses solely on how a challenged restraint affects the competitive process,”
and that antitrust protects consumer welfare by protecting the “competitive process”); see also DEVLIN, supra note 10,
at 254-68 (contending that the consumer-welfare standard is descriptively inaccurate in several respects).
207 See, e.g., ANTITRUST MODERNIZATION COMM’N, REPORT AND RECOMMENDATIONS 35 (Apr. 2007) (“For the last few
decades courts, agencies, and antitrust practitioners have recognized consumer welfare as the unifying goal of antitrust
law.”).
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attention to some of the “non-economic” goals that played a more prominent role in earlier
periods of antitrust history.208 The Neo-Brandeisian movement’s prescriptions are discussed in
greater detail below.209
The Big Tech Firms: A Summary of Selected
Antitrust Allegations
The Big Tech firms have achieved tremendous financial success. As of the publication of this
report, the combined market capitalization of Meta, Alphabet (Google’s parent), Amazon, and
Apple is more than $6.6 trillion—a figure that exceeds the value of all but the largest national
equity markets.210
While some have emphasized the quality of the firms’ offerings as the primary driver of their
ascent,211 others have alleged that Big Tech has obtained and cemented monopoly power through
anticompetitive conduct.212
This section of the report reviews selected antitrust allegations against the Big Tech firms.
Meta Platforms
Meta describes itself as a company that builds technology that “helps people connect, find
communities, and grow businesses.”213 More specifically, Meta offers a “family of apps” related
to social networking and messaging.214 This family of apps consists of
•
•
•
•
Facebook (a social network);
Instagram (a photo-sharing platform);
Messenger (a messaging app for Facebook users); and
WhatsApp (a messaging app).215
208 The Neo-Brandeisian movement derives its name from Louis Brandeis, a former Associate Justice of the Supreme
Court who was also a proponent of vigorous antitrust enforcement and a critic of large corporations. See Lina M. Khan,
The New Brandeis Movement: America’s Antimonopoly Debate, 9 J. EURO. COMPETITION L. & PRACTICE 131 (2018).
209 See infra “Revisiting the Goals of Antitrust: The Neo-Brandeisian Movement.”
210 See Largest Companies by Market Cap, COMPANIESMARKETCAP (last visited Nov. 6, 2023),
https://companiesmarketcap.com/; Largest Stock Exchange Operators Worldwide as of October 2022, By Market
Capitalization of Listed Companies, STATISTA (Jan. 2023), https://www.statista.com/statistics/270126/largest-stockexchange-operators-by-market-capitalization-of-listed-companies/; Market Capitalization of Listed Domestic
Companies, THE WORLD BANK (last visited Mar. 15, 2023), https://data.worldbank.org/indicator/CM.MKT.LCAP.CD.
211 E.g., Investigation into the State of Competition in Digital Markets, Subcomm. on Antitrust, Commercial, & Admin.
L. of H. Comm. on the Judiciary (May 11, 2020) (statement of Randal C. Picker, James Parker Distinguished Service
Prof. of Law, The Univ. of Chi. L. Sch. at 34), https://picker.uchicago.edu/PickerHouseStatement.100.pdf.
212 E.g., HJC REPORT, supra note 11, at 12-17.
213 Meta Platforms, Inc., Annual Report (Form 10-K) at 7 (Feb. 2, 2023).
214 Id. Meta also produces augmented and virtual reality products via its Reality Labs division. Id. at 8.
215 Id. at 7.
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In October 2023, Meta reported that Facebook had 2.09 billion daily active users and 3.05 billion
monthly active users.216 The company’s family of apps reportedly features 3.14 billion daily
active people and 3.96 billion monthly active people.217
Allegations of Market Power
Some observers have argued that Meta possesses significant market power in the market for
social networking.218 The Federal Trade Commission (FTC) shares that view. In an ongoing
monopolization lawsuit, the Commission alleges that Meta has held monopoly power in the
market for “personal social networking services” (PSNS) since at least 2011.219 To support such
claims, Meta’s critics have argued that the firm has persistently maintained a large market share
and benefited from substantial entry barriers, including powerful network effects and high
switching costs.220
Others disagree. Meta has argued that it operates in a “dynamic, intensely competitive” industry
in which there are many substitutes for its services.221 In its litigation with the FTC, the firm has
criticized the Commission’s alleged PSNS market as unduly narrow insofar as it excludes rivals
like YouTube, TikTok, LinkedIn, and Twitter.222
Meta and some commentators have also rejected the notion that entry barriers have caused the
market to decisively tip in Meta’s favor.223 For example, observers have highlighted the ability of
differentiated firms like TikTok and Snapchat to rapidly gain scale despite Meta’s ostensible
network advantages.224
Allegations of Anticompetitive Conduct
Meta has also been accused of engaging in anticompetitive conduct. The FTC’s lawsuit contends
that Meta has maintained its dominant position through its 2012 acquisition of Instagram and its
216 Meta Platforms, Inc., Quarterly Report (Form 10-Q) at 35 (Oct. 26, 2023).
217 Id.
218 HJC REPORT, supra note 11, at 133; ONLINE PLATFORMS AND DIGITAL ADVERTISING: MARKET STUDY FINAL REPORT,
U.K. COMPETITION & MKTS AUTHORITY 146 (July 1, 2020), https://assets.publishing.service.gov.uk/media/
5fa557668fa8f5788db46efc/Final_report_Digital_ALT_TEXT.pdf [hereinafter “CMA REPORT”]; Fiona M. Scott
Morton & David C. Dinielli, Roadmap for an Antitrust Case Against Facebook, OMIDYAR NETWORK 11-15 (June
2020), https://www.omidyar.com/wp-content/uploads/2020/06/Roadmap-for-an-Antitrust-Case-Against-Facebook.pdf;
DIGITAL PLATFORMS INQUIRY: FINAL REPORT, AUSTRALIAN COMPETITION & CONSUMER COMM’N 9 (June 2019),
https://www.accc.gov.au/system/files/Digital%20platforms%20inquiry%20-%20final%20report.pdf [hereinafter
“ACCC REPORT”].
219 Substitute Amended Complaint for Injunctive and Other Equitable Relief ¶ 164, FTC v. Facebook, Inc., No.
1:20-cv-03590 (D.D.C. Sept. 8, 2021).
220 Id. ¶ 212; HJC REPORT, supra note 11, at 136-47; Scott Morton & Dinielli, supra note 218, at 11; ACCC REPORT,
supra note 218, at 58. The FTC and some commentators have also attempted to establish that Meta has monopoly
power with direct evidence, arguing that the firm has degraded the quality of its products without losing significant
numbers of users. Substitute Amended Complaint ¶¶ 205-09, FTC v. Facebook, Inc., No. 1:20-cv-03590 (D.D.C. Sept.
8, 2021); Dina Srinivasan, The Antitrust Case Against Facebook: A Monopolist’s Journey Towards Pervasive
Surveillance in Spite of Consumer’s Preference for Privacy, 16 BERKELEY BUS. L.J. 39 (2019).
221 Memorandum in Support of Facebook, Inc.’s Motion to Dismiss FTC’s Complaint at 11, FTC v. Facebook, Inc., No.
1:20-cv-03590 (D.D.C. Mar. 10, 2021).
222 Id. at 10.
223 Id. at 13-16; Herbert J. Hovenkamp, Selling Antitrust, 73 HASTINGS L.J. 1621, 1623 (2022) [hereinafter
“Hovenkamp, Selling Antitrust”]; Jay Ezrielev & Genaro Marquez, Interoperability: The Wrong Prescription for
Platform Competition, COMPETITION POLICY INT’L ANTITRUST CHRON. 8, 13-14 (June 2021).
224 Hovenkamp, Selling Antitrust, supra note 223, at 1623; Ezrielev & Marquez, supra note 223, at 8.
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2014 acquisition of WhatsApp.225 The Commission argues that Meta’s Instagram purchase
allowed it to neutralize a rapidly growing competitive threat, giving the firm control over what
became two of the most popular social networks in the world.226 The FTC also contends that
Meta’s acquisition of WhatsApp preserved its monopoly by preventing WhatsApp from entering
the PSNS market.227
Besides targeting Meta’s major acquisitions, the FTC and some commentators have criticized the
company’s treatment of software developers.228 These allegations involve access to Facebook
Platform—an initiative whereby Meta encouraged developers to create apps that interoperate with
Facebook.229 As part of this initiative, Meta provided software developers with application
programming interfaces (APIs) and other tools that allowed them to access certain Facebook data
and functionalities.230 According to the FTC, Facebook Platform ultimately became key
infrastructure for app developers because of Facebook’s large user base.231 The Commission’s
lawsuit alleges that Meta leveraged control of this infrastructure to preserve its monopoly,
requiring developers that participated in Facebook Platform to refrain from creating apps that
would compete with Facebook products.232
Meta has denied engaging in anticompetitive conduct. The company has argued that its Instagram
acquisition allowed it to invest resources and expertise in a young startup, hastening the small
firm’s growth.233 Meta has also defended its WhatsApp purchase, arguing that the FTC has failed
to present evidence that WhatsApp would have likely entered social networking absent the
acquisition.234 Finally, Meta has argued that its policies governing access to Facebook Platform—
which it has since revised—were lawful under duty-to-deal doctrine.235
As of the publication of this report, the FTC’s monopolization case against Meta is in discovery, a
pre-trial stage of litigation in which the parties develop evidence that can be used at trial.
Although the district court dismissed the agency’s initial complaint for failing to plausibly allege
monopoly power,236 the court ultimately allowed the case to proceed after concluding that the
Commission’s amended complaint was sufficiently plausible to survive a motion to dismiss.237
225 Substitute Amended Complaint ¶¶ 77-129, FTC v. Facebook, Inc., No. 1:20-cv-03590 (D.D.C. Sept. 8, 2021); see
also HJC REPORT, supra note 11, at 150-60 (arguing that Meta’s Instagram and WhatsApp acquisitions harmed
competition).
226 Substitute Amended Complaint ¶¶ 80-106, FTC v. Facebook, Inc., No. 1:20-cv-03590 (D.D.C. Sept. 8, 2021).
227 Id. ¶¶ 107-29.
228 Id. ¶¶ 130-163; HJC REPORT, supra note 11, at 166-70; Scott Morton & Dinielli, supra note 218, at 24-25.
229 Substitute Amended Complaint ¶¶ 25-42, FTC v. Facebook, Inc., No. 1:20-cv-03590 (D.D.C. Sept. 8, 2021).
230 Id.
231 Id. ¶ 131.
232 Id. ¶ 133. A group of state attorneys general made similar claims in a lawsuit filed in 2020. New York v. Facebook,
Inc., 549 F. Supp. 3d 6 (D.D.C. 2021). A federal district court dismissed that lawsuit in 2021, concluding that the
claims challenging Facebook’s acquisitions were barred by the doctrine of laches (which precludes lawsuits filed after
an unreasonable delay); that Facebook’s general policy of withholding APIs from rival developers was not
exclusionary standing alone; and that specific refusals to deal occurred too long ago to support injunctive relief. Id. at
27-31, 34.
233 Memorandum in Support of Facebook, Inc.’s Motion to Dismiss FTC’s Complaint at 29-30, FTC v. Facebook, Inc.,
No. 1:20-cv-03590 (D.D.C. Oct. 4, 2021).
234 Id. at 24.
235 Id. at 35.
236 FTC v. Facebook, Inc., 560 F. Supp. 3d 1, 4 (D.D.C. 2021).
237 FTC v. Facebook, Inc., 581 F. Supp. 3d 34, 43-52 (D.D.C. 2022). While the district court has allowed the FTC’s
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Google is a ubiquitous presence in the digital economy. The firm began as an internet search
company and is now also a major player in digital advertising, mobile operating systems, app
distribution, digital maps, email, and web browsing.238 The following subsections discuss antitrust
allegations involving Google’s conduct related to online search, mobile operating systems and
app distribution, and digital advertising.
Online Search
Allegations of Market Power
Some commentators have argued that Google has significant market power in the market for
general online search.239 The DOJ agrees. In an ongoing monopolization lawsuit, the DOJ
contends that Google has monopoly power in the market for “general search services” based on
an alleged market share of 88% and the presence of substantial entry barriers, including
economies of scale.240 The DOJ has also alleged monopolization of separate markets for “general
search text advertising” and “search advertising.”241
For its part, Google has claimed that it operates in a “highly competitive environment” and faces
a “vast array of competitors.”242 The company also argues that, for particular search queries, it
competes against a range of firms—such as Amazon, eBay, and Yelp—that would not fall within
a market for general search services.243
Allegations of Anticompetitive Conduct
Search Distribution
The DOJ’s monopolization lawsuit contends that Google has maintained its search monopoly
through exclusionary agreements with firms that control search distribution.244 The agreements
make Google the default search engine on various products in exchange for a share of Google’s
advertising revenue.245
challenge to Meta’s Instagram and WhatsApp acquisitions to proceed, it dismissed the agency’s claims involving
access to Facebook Platform. Id. at 57-59. In rejecting the latter claims, the court concluded that Meta had no general
duty to allow potential rivals to access Facebook Platform. Id. at 58-59. Although the court indicated that specific
refusals may be actionable, it held that the refusals alleged by the FTC could not justify injunctive relief because they
occurred in 2013 and were not ongoing. Id.
238 HJC REPORT, supra note 11, at 174.
239
CMA REPORT, supra note 218, at 73; HJC REPORT, supra note 11, at 176-82; ACCC REPORT, supra note 218, at 58;
Google Search (Shopping) (Case AT.39740), Commission Decision ¶ 271 (June 27, 2017),
https://ec.europa.eu/competition/antitrust/cases/dec_docs/39740/39740_14996_3.pdf [hereinafter “EC Google
Shopping Decision”].
240 Amended Complaint ¶¶ 92-96, United States v. Google LLC, No. 1:20-cv-03010 (D.D.C. Jan. 15, 2021).
241 Memorandum Opinion at 5, United States v. Google LLC, No. 1:20-cv-03010 (D.D.C. Aug. 4, 2023).
242 HJC REPORT, supra note 11, at 179.
243 Id.
244 Amended Complaint ¶ 4, United States v. Google LLC, No. 1:20-cv-03010 (D.D.C. Jan. 15, 2021). A group of state
attorneys general has made similar allegations in a case that has been consolidated with the DOJ’s lawsuit.
Memorandum Opinion at 5, United States v. Google LLC, No. 1:20-cv-03010 (D.D.C. Aug. 4, 2023).
245 Memorandum Opinion at 3, United States v. Google LLC, No. 1:20-cv-03010 (D.D.C. Aug. 4, 2023).
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The lawsuit focuses on Google’s agreements with two categories of counterparties: (1) browser
developers, and (2) manufacturers and wireless carriers that sell devices running the Android
mobile operating system, which Google acquired in 2005.246
Under Google’s agreements with browser developers—primarily Apple and Mozilla—the
developers have agreed to make Google the default search engine for all search access points on
their browsers in exchange for payments from Google.247
The DOJ’s allegations regarding device manufacturers and wireless carriers involve two types of
agreements. One set of contracts requires manufacturers to preinstall Google Search and place an
associated search widget on device home screens as conditions of licensing other proprietary
Google apps.248 Under another set of agreements, manufacturers and wireless carriers commit to
make Google the only preinstalled search engine on covered devices and the default for all search
access points in exchange for payments from Google.249
In its lawsuit, the DOJ contends that Google’s agreements amount to exclusive contracts that
foreclose substantial channels of search distribution, depriving rivals of the scale needed to serve
as effective competitors.250
Google has made several arguments in response. While Google concedes that its revenue-sharing
agreements with manufacturers and carriers require exclusivity, it has denied that its contracts
with browser developers and its Android licensing agreements amount to exclusive dealing.251
The browser agreements are not exclusive, Google contends, because they do not prevent
developers from promoting rival search engines and users can change a browser’s default search
engine.252 Similarly, Google argues that its Android licensing agreements do not prohibit
manufacturers from preinstalling rival search apps or browsers.253
Google further maintains that the relevant agreements would not be anticompetitive even if they
did require exclusivity. Rather, Google claims that it has successfully competed with rivals to
secure the challenged agreements with browser developers, who have chosen Google as their
default search engine based on considerations of quality and price.254 Google claims that this
“competition for the contract” is the type of merits competition that antitrust encourages.255
Google also denies that its Android agreements result in substantial foreclosure, arguing that the
appropriate measure of foreclosure requires an analysis of consumer behavior absent the
agreements, rather than the percentage of the market covered by those agreements.256 Because
few consumers would switch from Google to another search engine if the challenged agreements
did not exist, Google argues, the agreements do not substantially foreclose rivals.257
246 Id.
247 Id. at 10.
248 Id. at 13.
249 Id. at 13-14.
250 Id. at 30.
251 Id.
252 Id. at 31-33.
253 Id. at 40.
254 Id. at 35-36.
255 Id. at 35.
256 Id. at 42-43.
257 Id. at 43. In its motion for summary judgment, Google argued that the plaintiffs’ expert evidence indicated that
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In August 2023, a federal district court allowed the claims discussed above to proceed, denying in
part Google’s motion for summary judgment.258 The court concluded that there were disputed
issues of material fact as to whether Google’s browser agreements and Android licensing
agreements were de facto exclusive, including disagreement over the competitive significance of
default status.259 The court likewise held that Google’s “competition for the contract” defense and
the appropriate measure of foreclosure raised issues that could not be resolved on summary
judgment.260
Foreclosure metrics are likely to be a key issue at trial, which began in September 2023 and is
ongoing as of the publication of this report. While courts regularly look to the share of
distribution covered by exclusive contracts in evaluating foreclosure, some commentators have
advocated alternative approaches, including the type of counterfactual analysis that Google
proposes.261 The choice between alternative metrics may present the court with a trade-off: while
Google’s preferred methodology arguably involves a more accurate assessment of the competitive
impact of the challenged agreements, the DOJ’s simpler approach may be more manageable and
appears to be more firmly rooted in the case law.262
The issue of procompetitive justification may also prove significant. The DOJ’s case relies
heavily on the importance of scale in improving search-engine quality. If Google can establish
that it has not exhausted the relevant scale economies, those economies may constitute a
procompetitive justification for its distribution agreements.263 To the extent that the court accepts
this justification, the DOJ may need to prove that Google can secure those economies through
less restrictive means or that the anticompetitive effects of the agreements outweigh their
benefits.
Self-Preferencing
Commentators and some foreign regulators have also argued that Google has leveraged its
dominance in general search to favor its own vertical offerings. For example, the HJC Report
concluded that Google has adjusted its search algorithms to automatically elevate some of
Google’s vertical services, like its video-sharing platform YouTube, in search results.264
(1) approximately 1% of all search queries would shift from Google to non-Google search engines if manufacturers and
carriers adopted a “choice screen” allowing consumers to select their own default search engines (a remedy
implemented in an EU competition case involving Google Search), and (2) approximately 11.6% to 13.5% of search
queries would shift from Google to non-Google search engines if a rival search engine was the exclusive preinstalled
default on Android devices. Id. at 43.
258
Id. at 60.
259 Id. at 34-35.
260 Id. at 36-37, 43. The court granted Google’s motion for summary judgment with respect to certain other claims,
some brought by the DOJ and some brought by a group of state attorneys general in a case that has been consolidated
with the DOJ lawsuit. Id. at 60.
261 Joshua D. Wright, Moving Beyond Naïve Foreclosure Analysis, 19 GEO. MASON L. REV. 1163, 1177-81 (2012).
262 Id. at 1177 (observing that “most courts” rely on the share of distribution covered by a challenged agreement to
evaluate foreclosure, with “some occasional modifications”).
263 See Thom Lambert, Why the Federal Government’s Antitrust Case Against Google Should—and Likely Will—Fail,
TRUTH ON THE MARKET (Dec. 18, 2020), https://truthonthemarket.com/2020/12/18/why-the-federal-governmentsantitrust-case-against-google-should-and-likely-will-fail/.
264 HJC REPORT, supra note 11, at 187-92.
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This type of self-preferencing prompted the European Commission—which enforces European
Union competition law—to fine Google €2.42 billion in 2017 for giving prominent placement to
its comparison-shopping service and demoting rival services in search results.265
The FTC investigated similar allegations of self-preferencing involving Google Search in 2012,
but concluded that it had not found sufficient evidence of an antitrust violation.266 The agency
determined that Google’s favorable placement of its own verticals could plausibly be viewed as
an improvement in the quality of Google’s search product.267 The Commission also did not find
sufficient evidence that Google had manipulated its search algorithms to unfairly disadvantage
rival vertical websites.268
Mobile Operating Systems and App Distribution
Allegations of Market Power
Mobile Operating Systems
In addition to operating a major search engine, Google controls Android—a leading mobile
operating system. Android and Apple’s iOS represent the two dominant mobile operating systems,
together accounting for 99% of the market.269 Because Apple does not license iOS to other device
manufacturers, Android by itself occupies a very large share of the market for licensable mobile
operating systems—by some estimates, 99% of that market.270
Some commentators have argued that the market for licensable mobile operating systems is the
relevant one for antitrust purposes, based on factors like high switching costs.271 Private plaintiffs
and (in a separate case that has been settled) a group of state attorneys general have argued that
Google has monopoly power in this market based on the company’s dominant market share and
the presence of substantial entry barriers, such as network effects and research and development
costs.272
Google denies such allegations, arguing that consumers “can and do switch and multi-home
among and between mobile and nonmobile ecosystems, including between Android and iOS.”273
265 EC Google Shopping Decision, supra note 239.
266 Statement of the Federal Trade Commission Regarding Google’s Search Practices, In the Matter of Google Inc., No.
111-0163 (FTC Jan. 3, 2013).
267 Id. at 3.
268 Id.
269 HJC REPORT, supra note 11, at 100-02.
270 First Amended Complaint ¶ 7, State of Utah et al. v. Google LLC, No. 3:21-cv-05227 (N.D. Cal. Nov. 1, 2021); see
also Second Amended Complaint for Injunctive Relief ¶¶ 16, 55, Epic Games, Inc. v. Google LLC, No. 3:20-cv-05671
(N.D. Cal. Nov. 17, 2022) (alleging a market share of “over 95%”).
271 HJC REPORT, supra note 11, at 102. In a 2018 enforcement action, the European Commission concluded that
competition from Apple does not sufficiently constrain Google for similar reasons. See Press Release, Euro. Comm’n,
Antitrust: Commission Fines Google €4.34 Billion for Illegal Practices Regarding Android Mobile Devices to
Strengthen Dominance of Google’s Search Engine (July 18, 2018),
https://ec.europa.eu/commission/presscorner/detail/en/IP_18_4581.
272 Second Amended Complaint for Injunctive Relief ¶¶ 55-64, Epic Games, Inc. v. Google LLC, No. 3:20-cv-05671
(N.D. Cal. Nov. 17, 2022); First Amended Complaint ¶¶ 44-58, State of Utah et al. v. Google LLC, No. 3:21-cv-05227
(N.D. Cal. Nov. 1, 2021).
273 Defendants’ Answers and Defenses to State of Utah et al. First Amended Complaint ¶ 55-56, No. 3:21-cv-05227
(N.D. Cal. Nov. 15, 2021); see also Defendants’ Answer, Defenses, and Counterclaims to Epic Games, Inc.’s Second
Amended Complaint for Injunctive Relief ¶¶ 55, 57, No. 3:20-cv-05671 (N.D. Cal. Dec. 1, 2022).
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Mobile App Distribution
Litigants have also contended that, through its Google Play Store, Google has market power in
certain markets related to mobile-app distribution. Some plaintiffs have defined the relevant
market as consisting of the distribution of apps to Android users.274 They allege that Google has
monopoly power in this market based on the Play Store’s market share of more than 90%, strong
network effects, high switching costs, and Google’s ability to charge a 30% commission on apps
purchased through the Play Store.275
Some plaintiffs have also argued in the alternative that Google has market power in a broader
market for mobile app distribution—that is, a market not limited to Android users.276 A group of
state attorneys general, for example, has argued that Google occupies a sizeable share of this
market, enjoys large profit margins, and benefits from formidable entry barriers.277
Google rejects these claims. It contends that consumers can use different platforms to access apps
and that “Apple and Google compete vigorously in the mobile operating system environment on
multiple dimensions, including innovation, price, privacy, and security.”278
In-App Payment Processing
Plaintiffs have further claimed that Google has monopoly power in a market for in-app payment
(IAP) processing for Android apps.279 They have based this claim on the Play Store’s large share
of the market for Android app distribution and Google’s requirement that software developers
using the Play Store also use Google’s IAP processor.280
As discussed, for many transactions, Google charges a 30% commission for IAP processing—a
rate that is considerably higher than those charged by other electronic payment processors.281
274 Second Amended Complaint for Injunctive Relief ¶¶ 68-72, Epic Games, Inc. v. Google LLC, No. 3:20-cv-05671
(N.D. Cal. Nov. 17, 2022); First Amended Complaint ¶¶ 63-73, State of Utah et al. v. Google LLC, No. 3:21-cv-05227
(N.D. Cal. Nov. 1, 2021).
275 Second Amended Complaint for Injunctive Relief ¶¶ 75-88, Epic Games, Inc. v. Google LLC, No. 3:20-cv-05671
(N.D. Cal. Nov. 17, 2022); First Amended Complaint ¶¶ 76-78, State of Utah et al. v. Google LLC, No. 3:21-cv-05227
(N.D. Cal. Nov. 1, 2021).
276 Second Amended Complaint for Injunctive Relief ¶ 73, Epic Games, Inc. v. Google LLC, No. 3:20-cv-05671
(N.D. Cal. Nov. 17, 2022); First Amended Complaint ¶¶ 79-81, State of Utah et al. v. Google LLC, No. 3:21-cv-05227
(N.D. Cal. Nov. 1, 2021).
277 First Amended Complaint ¶¶ 79-81, State of Utah et al. v. Google LLC, No. 3:21-cv-05227 (N.D. Cal. Nov. 1,
2021). The state attorneys general allege that Google’s share of this market in the United States exceeds 30 percent,
while its share of the global market (excluding China) is approximately 53% by revenue. Id. ¶ 80.
278
Defendants’ Answers, Defenses, and Counterclaims to Epic Games, Inc.’s Second Amended Complaint for
Injunctive Relief ¶ 80, No. 3:20-cv-05671 (N.D. Cal. Dec. 1, 2022).
279 Second Amended Complaint for Injunctive Relief ¶¶ 158-60, Epic Games, Inc. v. Google LLC, No. 3:20-cv-05671
(N.D. Cal. Nov. 17, 2022); First Amended Complaint ¶¶ 182-86, State of Utah et al. v. Google LLC, No. 3:21-cv05227 (N.D. Cal. Nov. 1, 2021).
280 Second Amended Complaint for Injunctive Relief ¶¶ 158-60, Epic Games, Inc. v. Google LLC, No. 3:20-cv-05671
(N.D. Cal. Nov. 17, 2022); First Amended Complaint ¶¶ 182-86, State of Utah et al. v. Google LLC, No. 3:21-cv05227 (N.D. Cal. Nov. 1, 2021).
281 Second Amended Complaint for Injunctive Relief ¶ 160, Epic Games, Inc. v. Google LLC, No. 3:20-cv-05671
(N.D. Cal. Nov. 17, 2022). In March 2021, Google announced plans to lower its commissions from 30% to 15% for the
first $1 million in revenue that developers earn using Google’s billing system. Manish Singh, Google Play Drops
Commissions to 15% from 30%, Following Apple’s Move Last Year, TECHCRUNCH (Mar. 16, 2021),
https://techcrunch.com/2021/03/16/google-play-drops-commissions-to-15-from-30-following-apples-move-last-year/.
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Google has denied possessing monopoly power related to IAP processing.282
Allegations of Anticompetitive Conduct
Mobile App Distribution
Google has also been accused of engaging in a variety of anticompetitive activities involving app
distribution. Some of the allegations are reviewed below.
•
•
•
•
•
Google has allegedly imposed technical barriers that make it difficult for
consumers to download Android apps from sources other than the Google Play
Store—a practice commonly known as “sideloading.”283 Litigants have claimed
that sideloading Android apps entails a complicated process that includes several
security warnings discouraging such actions.284 Google has also been accused of
making it unnecessarily difficult to update sideloaded apps.285
Google has allegedly barred software developers from distributing competing
app stores through the Play Store.286
Google has allegedly required mobile device manufacturers that license Android
and certain other key Google services to preinstall the Google Play Store on their
devices.287 Plaintiffs have argued that this preinstallation requirement harms
competition by giving the Play Store an advantage over other app stores.288
Google has allegedly required device manufacturers that offer the Play Store and
other “must-have” Google services to refrain from selling devices that run
“Android forks”—modified versions of Android that Google has not approved.289
Plaintiffs argue that these restrictions have stifled the development of alternative
versions of Android that would be free from some of the restrictions on app
distribution discussed above.290
Google has allegedly entered into revenue-sharing agreements that deter device
manufacturers from developing competing app stores.291 The challenged
agreements give device manufacturers a share of Google’s advertising and Play
Store revenue from the devices they sell in exchange for a commitment to refrain
from competing against the Play Store.292
282 Defendants’ Answers, Defenses, and Counterclaims to Epic Games, Inc.’s Second Amended Complaint for
Injunctive Relief ¶ 158, No. 3:20-cv-05671 (N.D. Cal. Dec. 1, 2022); Defendants’ Answers and Defenses to State of
Utah et al. First Amended Complaint ¶ 182, No. 3:21-cv-05227 (N.D. Cal. Nov. 15, 2021).
283 First Amended Complaint ¶¶ 83-95, State of Utah et al. v. Google LLC, No. 3:21-cv-05227 (N.D. Cal. Nov. 1,
2021).
284 Id.
285 Id. ¶ 96.
286 Id. ¶¶ 107-10.
287 Id. ¶¶ 124-25.
288 Id. ¶ 125.
289 Id. ¶¶ 105-06.
290 Id.
291 Id. ¶¶ 130-35.
292 Id.
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Google has either denied engaging in the relevant conduct or rejected the contention that the
alleged conduct is anticompetitive.293
In-App Payment Processing
Plaintiffs have also accused Google of engaging in anticompetitive conduct in the market for
Android IAP processing. They have alleged that Google’s requirement that developers using the
Play Store also use Google’s IAP processor represents an unlawful tying arrangement.294
Digital Advertising
Allegations of Market Power
In addition to its search and app-distribution activities, Google is a major force in digital display
advertising markets.
In those markets, online ad publishers—like news websites—sell advertising space through
exchanges.295 Those ad exchanges conduct automated auctions in which advertisers can bid for ad
space.296
Intermediaries facilitate this process for both publishers and advertisers. Large publishers manage
their ad inventory using a type of software known as an ad server, which interfaces with ad
exchanges on behalf of publishers.297 On the other side of the market, advertisers employ
ad-buying tools, which connect them with ad exchanges and allow them to purchase ad space.298
Google operates in several segments of these markets via an ad exchange, a publisher ad server,
and ad-buying tools for advertisers.299
The DOJ and (in a separate lawsuit) a group of state attorneys general (state AGs) have argued
that Google has monopoly power in multiple ad-tech markets.
In January 2023, the DOJ filed a complaint alleging that Google has monopoly power in the
markets for publisher ad servers,300 ad exchanges,301 and advertiser ad networks.302
In a separate case, a group of state AGs has alleged that Google has monopoly power in the
markets for ad exchanges, ad servers, and ad-buying tools for small advertisers.303 The state AGs
293 Defendants’ Answers and Defenses to State of Utah et al. First Amended Complaint ¶¶ 83-89, 96, 105-110, 124-25,
130-35, No. 3:21-cv-05227 (N.D. Cal. Nov. 15, 2021).
294 Second Amended Complaint for Injunctive Relief ¶¶ 161-66, Epic Games, Inc. v. Google LLC, No. 3:20-cv-05671
(N.D. Cal. Nov. 17, 2022); First Amended Complaint ¶¶ 162-67, State of Utah et al. v. Google LLC, No. 3:21-cv05227 (N.D. Cal. Nov. 1, 2021).
295 Opinion and Order at 3, In re Google Digital Advertising Antitrust Litigation, No. 21-md-3010 (S.D.N.Y. Sept. 13,
2022).
296 Id.
297 Id. at 4.
298 Id. at 10-11.
299 Id. at 6-12.
300 Complaint ¶ 285, United States v. Google LLC, No. 1:23-cv-00108 (E.D. Va. Jan. 24, 2023).
301 Id. ¶ 296.
302 Id. ¶ 301.
303 Opinion and Order at 7-8, 11, In re Google Digital Advertising Antitrust Litigation, No. 21-md-3010 (S.D.N.Y.
Sept. 13, 2022).
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also contend that Google has monopoly power or a dangerous probability of acquiring monopoly
power in the market for ad-buying tools for large advertisers.304
In September 2022, a federal district court concluded that the state AGs’ allegations of monopoly
power were sufficiently plausible to survive a motion to dismiss.305 In April 2023, a district court
likewise rejected Google’s motion to dismiss the DOJ’s ad-tech lawsuit.306
Allegations of Anticompetitive Conduct
The DOJ and state AG lawsuits contend that Google has engaged in a range of anticompetitive
practices in several digital-advertising markets, allowing it to obtain and cement a dominant
position across the ad-tech stack.
The DOJ’s lawsuit claims that, in the early 2000s, Google’s ad-buying tools occupied a dominant
position on the advertiser side of the ad-tech market.307 Then, in 2008, Google acquired a firm
called DoubleClick, which operated a leading publisher ad server and a nascent ad exchange.308
After the DoubleClick acquisition, the DOJ contends, Google leveraged its position across the
ad-tech chain to benefit its own properties. Among other things, the DOJ alleges that Google
made demand from its ad-buying tools available only through its ad exchange.309 Google also
allegedly required publishers to use its ad server to receive real-time bids from its ad exchange.310
The state AG ad-tech lawsuit makes similar allegations.311
In September 2022, a federal district court held that the state AGs had plausibly alleged tying
claims under Sections 1 and 2 of the Sherman Act based on their assertion that Google had
coerced publishers into using its ad server as a condition of receiving live bids from its ad
exchange.312
The DOJ and state AG lawsuits also target a program used by Google’s ad server that allegedly
gave Google’s ad exchange advantages over rival exchanges.313 Another set of accusations
involves programs under which Google allegedly manipulated bids from its advertiser clients in
ways that advantaged its ad exchange and publisher ad server.314
304 Id. at 11.
305 Id. at 19, 34-35.
306 Order, United States v. Google LLC, No. 1:23-cv-00108 (E.D. Va. Apr. 28, 2023).
307 Complaint ¶¶ 11-13, United States v. Google LLC, No. 1:23-cv-00108 (E.D. Va. Jan. 24, 2023).
308 Id. ¶ 16. The FTC declined to challenge Google’s DoubleClick acquisition at the time. Press Release, Fed. Trade
Comm’n, Federal Trade Commission Closes Google/DoubleClick Investigation (Dec. 20, 2007),
https://www.ftc.gov/news-events/news/press-releases/2007/12/federal-trade-commission-closes-googledoubleclickinvestigation.
309 Complaint ¶ 89, United States v. Google LLC, No. 1:23-cv-00108 (E.D. Va. Jan. 24, 2023).
310 Id. ¶ 104. According to the DOJ’s complaint, publishers could use Google’s ad exchange without using its ad server
by selling ad space based on historical—rather than real-time—prices. Id. The DOJ contends, however, that this was
not an attractive option because the resulting prices were often considerably lower than those received from real-time
bids. Id.
311 Opinion and Order at 18, In re Google Digital Advertising Antitrust Litigation, No. 21-md-3010 (S.D.N.Y. Sept. 13,
2022).
312 Id. at 16-20, 77-78.
313 Complaint ¶¶ 21, 120-25, United States v. Google LLC, No. 1:23-cv-00108 (E.D. Va. Jan. 24, 2023); Opinion and
Order at 44-50, In re Google Digital Advertising Antitrust Litigation, No. 21-md-3010 (S.D.N.Y. Sept. 13, 2022).
314 Complaint ¶¶ 24, 139, 161-62, United States v. Google LLC, No. 1:23-cv-00108 (E.D. Va. Jan. 24, 2023); Opinion
and Order at 50-55, In re Google Digital Advertising Antitrust Litigation, No. 21-md-3010 (S.D.N.Y. Sept. 13, 2022).
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Google maintains that its conduct is permissible under antitrust doctrine governing refusals to
deal, product design, and tying.315
The September 2022 district court decision in the state AG lawsuit concluded that the allegations
of anticompetitive harm from these activities were sufficiently plausible to survive a motion to
dismiss.316 As noted, the district court in the DOJ’s lawsuit also denied Google’s motion to
dismiss that case, which focused on the allegations of monopoly power.317
The Google ad-tech lawsuits are complex, and a full discussion of the relevant claims is beyond
the scope of this report.318 Most of the allegations nevertheless implicate a recurring theme in
discussions of antitrust and tech platforms: the leveraging of economic power to obtain and
solidify dominance across different markets.319
Amazon
Like Google, Amazon has expanded its remit over time. The company began as an online
bookseller, but now operates a leading e-commerce marketplace, a major cloud-computing
platform, a logistics network, and a television and film studio.320 The discussion below focuses on
the company’s e-commerce activities.
Allegations of Market Power
In a pending monopolization lawsuit, the FTC has alleged that Amazon has monopoly power in
two markets: the “online superstore” market and the “online marketplace services” market.321 The
FTC argues that “online superstores”—which are distinguished based on the breadth and depth of
their product offerings—are not reasonably interchangeable with other online stores because
consumers’ overall shopping costs would increase “dramatically” if they tried to replace online
superstores by shopping at several different online stores with more limited offerings.322
Brick-and-mortar stores are not adequate substitutes for online superstores, the complaint alleges,
because of the convenience, wider product selection, and personalized shopping experience
offered by online superstores.323
The FTC also identifies a separate market for “online marketplace services” offered to sellers.324
The relevant services include access to a significant number of customers; the ability to create
315 Reply Memorandum of Law in Further Support of Google LLC’s Motion to Dismiss Counts I through IV of State
Plaintiffs’ Third Amended Complaint at 16-30, In re Google Digital Advertising Antitrust Litigation, No. 21-md-3010
(S.D.N.Y. May 5, 2022).
316 Opinion and Order at 44-55, In re Google Digital Advertising Antitrust Litigation, No. 21-md-3010 (S.D.N.Y. Sept.
13, 2022).
317 Order, United States v. Google LLC, No. 1:23-cv-00108 (E.D. Va. Apr. 28, 2023).
318
For a more detailed discussion of the DOJ’s lawsuit, see CRS Legal Sidebar LSB10956, The DOJ’s Ad Tech
Antitrust Case Against Google: A Brief Overview, by Alexander H. Pepper & Jay B. Sykes.
319 See generally Patrick F. Todd, Digital Platforms and the Leverage Problem, 98 NEB. L. REV. 486 (2019).
320 HJC REPORT, supra note 11, at 247.
321 Complaint ¶¶ 121, 184, FTC v. Amazon.com, Inc., No. 2:23-cv-01495 (W.D. Wash. Sept. 26, 2023).
322 Id. ¶ 148.
323 Id. ¶¶ 140-47.
324 Id. ¶ 184. During an investigation that began in November 2020, the European Commission preliminarily concluded
that Amazon occupied a dominant position in certain European markets for the provision of online marketplace
services to third-party sellers. Press Release, Euro. Comm’n, Antitrust: Commission Accepts Commitments by Amazon
Barring it From Using Marketplace Seller Data, and Ensuring Equal Access to Buy Box and Prime (Dec. 20, 2022),
https://ec.europa.eu/commission/presscorner/detail/en/ip_22_7777 [hereinafter “Amazon EC Commitments”].
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and maintain pages with product information; and the ability to display customer reviews to
shoppers.325 The complaint alleges that “online marketplace services” are not reasonably
interchangeable with selling as a vendor to online or offline retail stores, which typically involves
wholesale pricing and transfer of title to the relevant products.326
The FTC’s complaint follows similar lawsuits, including an action filed by the D.C. Attorney
General (D.C. AG) under D.C. law and another by a putative class of consumers under the
Sherman Act.327 The D.C. AG’s complaint alleged that Amazon has monopoly power among
online marketplaces,328 while the consumer lawsuit contends that Amazon has monopoly power in
a retail e-commerce market and several e-commerce submarkets for specific products.329
In 2022, the Superior Court of the District of Columbia dismissed the D.C. AG lawsuit on several
grounds, including a failure to plausibly allege monopoly power.330 The D.C. AG has appealed
that decision.331 In contrast, a federal district court has denied Amazon’s motion to dismiss the
consumer lawsuit, concluding that the plaintiffs plausibly alleged monopoly power, in addition to
rule-of-reason claims under Section 1 of the Sherman Act.332
Amazon’s alleged monopoly power will likely be litigated vigorously. In identifying an “online
superstore” market, the FTC appears to be alleging a “cluster” market that consists of a vast array
of noncompeting goods.333 Courts have recognized cluster markets in other contexts. For
example, groups of noncompeting financial and medical services have been deemed to be
relevant antitrust markets in cases involving banks and hospitals.334 In another case, the Supreme
Court concluded that the relevant market consisted of a package of centrally monitored alarm
services.335
While some courts have recognized cluster markets based on considerations of administrative
convenience (i.e., where distinct markets face similar competitive conditions, obviating the need
for separate analyses), the FTC appears to rely on a different theory of clustering grounded in
“transactional complementarity.”336 Under this theory, a package of noncompeting goods or
services may qualify as a relevant antitrust market if a significant number of consumers would be
willing to pay supra-competitive prices for the convenience of receiving the goods or services as
a package.337 Commentators have also argued that economies of scope and network effects may
325 Complaint ¶ 185, FTC v. Amazon.com, Inc., No. 2:23-cv-01495 (W.D. Wash. Sept. 26, 2023).
326 Id. ¶¶ 191-97.
327 Frame-Wilson v. Amazon.com, Inc., 591 F. Supp. 3d 975 (2022); First Amended Complaint, District of Columbia v.
Amazon.com, Inc., No. 2021-CA-001775 (D.C. Super. Ct. Sept. 10, 2021).
328 First Amended Complaint ¶¶ 85-86, District of Columbia v. Amazon.com, Inc., No. 2021-CA-001775 (D.C. Super.
Ct. Sept. 10, 2021).
329 Frame-Wilson, 591 F. Supp. 3d at 989.
330 Order at 15-16, District of Columbia v. Amazon.com, Inc., No. 2021-CA-001775 (D.C. Super. Ct. Aug. 1, 2022).
331
Notice of Appeal, District of Columbia v. Amazon.com, Inc., No. 2021-CA-001775 (D.C. Super. Ct. Aug. 25,
2022).
332 Frame-Wilson, 591 F. Supp. 3d at 988-92.
333 See, e.g., Herbert Hovenkamp, Digital Cluster Markets, 2022 COLUM. BUS. L. REV. 246 (2022) [hereinafter
“Hovenkamp, Digital Cluster Markets”].
334 United States v. Philadelphia Nat’l Bank, 374 U.S. 321, 356 (1963); ProMedica Health Sys., Inc. v. FTC, 749 F.3d
559, 566-67 (6th Cir. 2014).
335 United States v. Grinnell Corp., 384 U.S. 563, 572 (1966).
336 See ProMedica Health Sys., Inc., 749 F.3d at 567 (distinguishing this theory from the administrative-convenience
approach); Ian Ayres, Rationalizing Antitrust Cluster Markets, 95 YALE L.J. 109, 114-18 (1985) (developing the
transactional-complementarity theory of clustering).
337 ProMedica Health Sys., Inc., 749 F.3d at 567.
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be rationales for clustering noncompeting products in the same market.338 Whether “online
superstores” represent an appropriately defined market for any of these reasons will likely turn on
the factual evidence that the FTC can ultimately adduce.
By alleging separate markets for “online superstores” and “online marketplace services,” the
FTC’s complaint also raises questions regarding the impact of the Supreme Court’s 2018 decision
in Ohio v. American Express (Amex).339 In Amex, the Court held that two-sided transaction
platforms like credit-card networks represent a single market, meaning a price increase on one
side of such a market (there, an increase in merchant fees) cannot by itself demonstrate an
anticompetitive exercise of market power.340 Instead, the Court concluded that the plaintiffs in
Amex needed to show anticompetitive effects on the credit-card market “as a whole”—for
example, that the defendant’s conduct increased the price or reduced the number of credit-card
transactions.341
Amex’s implications for the FTC’s case against Amazon are unclear. In a 2018 article, the current
FTC Chair argued that the Supreme Court’s reasoning in Amex appeared to apply to Amazon’s
marketplace.342 While the article did not elaborate on that assessment, there are similarities
between Amazon’s platform and credit-card networks. In Amex, the Court justified its
single-market conclusion on the ground that credit-card networks cannot make sales “unless both
sides of the platform [i.e., merchants and cardholders] simultaneously agree to use their
services.”343 As a result, the Court reasoned, credit-card networks cannot set prices for one side of
the market without considering the impact of those prices on the other side of the market.344
Similar dynamics may be at work in Amazon’s case. By allegedly charging monopoly prices to
sellers, Amazon may risk losing participants on that side of its platform, which would decrease
the value of its marketplace to consumers. If consumers shop elsewhere as a result, that would
further diminish the value of Amazon’s platform to sellers, setting off a negative feedback loop.345
The court may thus rely on Amex to reject the FTC’s effort to define separate markets for “online
superstores” and “online marketplace services.”
Some commentators, however, have highlighted possible distinctions between Amazon’s
marketplace and credit-card networks. While credit-card networks do little besides facilitate
transactions, for example, Amazon offers sellers a range of additional services.346 Whether these
types of distinctions will allow the FTC to sidestep Amex’s single-market rule for two-sided
transaction platforms remains to be seen.
338 Hovenkamp, Digital Cluster Markets, supra note 333, at 255-56, 262-71.
339 138 S. Ct. 2274 (2018).
340 Id. at 2287.
341 Id.
342 Lina Khan, The Supreme Court Just Quietly Gutted Antitrust Law, VOX (July 3, 2018), https://www.vox.com/the-
big-idea/2018/7/3/17530320/antitrust-american-express-amazon-uber-tech-monopoly-monopsony.
343 Amex, 138 S. Ct. at 2286.
344 Id.
345 Id. at 2281 (describing these dynamics and the interconnected pricing that allegedly results from them).
346 Dan Papscun, Amazon Antitrust Case Must Clear Amex Bar Set by Supreme Court, BLOOMBERG LAW (Sept. 29,
2023), https://news.bloomberglaw.com/antitrust/amazon-antitrust-case-must-clear-amex-bar-set-by-supreme-court;
Tim Wu, The American Express Opinion, Tech Platforms & the Rule of Reason, 7 J. ANTITRUST ENFORCEMENT 117
(2018).
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Allegations of Anticompetitive Conduct
Anti-Discounting Measures
Several lawsuits have alleged that Amazon has implemented measures to punish sellers on its
marketplace for offering lower prices in other transaction venues. The FTC’s lawsuit contends
that Amazon disqualifies sellers from appearing in its Buy Box—which features a product’s price
and the “Add to Cart” button, among other information—if Amazon discovers sellers offering
their products for a lower price in another online store.347 The complaint further alleges that
Amazon has entered into contracts with certain important sellers that prohibit the sellers from
discounting their products in other online stores.348 The FTC claims that these anti-discounting
measures prevent rival online marketplaces from offering products at lower prices and deprives
those rivals of necessary scale.349
The D.C. AG lawsuit and the consumer class action discussed above made similar allegations.350
As discussed, the Superior Court of the District of Columbia has dismissed the D.C. AG’s
complaint,351 and the D.C. AG has appealed that decision.352 The district court in the consumer
lawsuit, by contrast, denied Amazon’s motion to dismiss, concluding that the plaintiffs had
plausibly alleged that Amazon’s conduct caused anticompetitive harm.353
Amazon has rejected the allegation that the relevant policies are anticompetitive, arguing that
they reflect a decision to highlight products that are competitively priced.354
Tying of Amazon Prime and Amazon’s Fulfillment Service
The FTC’s lawsuit also alleges that Amazon maintains its monopolies by coercing sellers to use
its fulfillment services (i.e., storing, packaging, and preparing products for shipment).355
Specifically, the FTC contends that Amazon effectively requires sellers to use its fulfillment
services as a condition of participating in Amazon Prime—a subscription program that offers
customers fast shipping of eligible products, among other benefits.356 Prime eligibility boosts a
seller’s chances of winning the Buy Box, the FTC alleges, while sellers that forgo Prime
eligibility “effectively disappear from Amazon’s storefront.”357
347 Complaint ¶ 269, FTC v. Amazon.com, Inc., No. 2:23-cv-01495 (W.D. Wash. Sept. 26, 2023).
348 Id.
349 Id. ¶¶ 305-10, 324.
350 Frame-Wilson v. Amazon.com, Inc., 591 F. Supp. 3d 975, 981-82 (2022); First Amended Complaint ¶¶ 5-10,
District of Columbia v. Amazon.com, Inc., No. 2021-CA-001775 (D.C. Super. Ct. Sept. 10, 2021).
351 Order at 8-9, 15-16, District of Columbia v. Amazon.com, Inc., No. 2021-CA-001775 (D.C. Super. Ct. Aug. 1,
2022).
352 Notice of Appeal, District of Columbia v. Amazon.com, Inc., No. 2021-CA-001775 (D.C. Super. Ct. Aug. 25,
2022).
353 Frame-Wilson, 591 F. Supp. 3d at 991-92.
354 David Zapolsky, The FTC’s Lawsuit Against Amazon Would Lead to Higher Prices and Slower Deliveries for
Consumers—And Hurt Businesses, AMAZON (Sept. 26, 2023), https://www.aboutamazon.com/news/companynews/amazon-ftc-antitrust-lawsuit-full-response.
355 Complaint ¶ 351, FTC v. Amazon.com, Inc., No. 2:23-cv-01495 (W.D. Wash. Sept. 26, 2023).
356 Id. ¶ 353. In 2022, the European Commission accepted certain commitments from Amazon to resolve similar
concerns. See Amazon EC Commitments, supra note 328. Among other things, Amazon agreed to treat all sellers
equally in managing its Buy Box and to allow third-party sellers that participate in Prime to freely choose their logistics
and delivery services. Id.
357 Complaint ¶ 352, FTC v. Amazon.com, Inc., No. 2:23-cv-01495 (W.D. Wash. Sept. 26, 2023).
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The FTC argues that Amazon’s tying of Prime to its fulfillment services stifles the growth of
other online marketplaces in two ways. First, by allegedly tying Prime to its fulfillment services,
Amazon effectively requires sellers that want to use both Amazon’s marketplace and other online
marketplaces to use two separate fulfillment providers.358 This duplication, the FTC contends,
creates extra costs that could be avoided by consolidating inventory with one fulfillment provider,
which deters sellers from using other online marketplaces.359 Second, Amazon’s conduct
allegedly prevents independent fulfillment providers from gaining necessary scale, which
likewise increases the costs to sellers of utilizing multiple online marketplaces.360
In response, Amazon has said that it allows sellers that participate in Prime to use other
fulfillment providers as long as those providers “are able to meet . . . Prime customers’ high
expectations for fast, reliable delivery.”361
Use of Third-Party Seller Data
Amazon’s dual role as both a marketplace operator and a seller on its own marketplace has also
attracted scrutiny. Critics have contended that this integration generates conflicts of interest,
which have led Amazon to leverage control of its marketplace to advantage its own products and
services in various ways.362
Some of these allegations involve Amazon’s use of data. The HJC Report and European
regulators have accused Amazon of using data generated by third-party sellers on its marketplace
to identify and imitate popular products for its private-label business.363
During congressional testimony in July 2020, Amazon’s founder and former chief executive said
that the company has a policy against using seller-specific data to aid its private-label business.364
He indicated, however, that he could not guarantee that this policy had never been violated.365
Amazon reportedly does not have a policy against using aggregated seller data to assist its retail
business.366
Commentators have disputed the competitive effects of a platform’s use of user data to enter new
markets. Some have argued that Amazon’s entry into new markets forces other sellers to lower
358 Id. ¶ 366.
359 Id.
360 Id.
361 Zapolsky, supra note 354.
362 HJC REPORT, supra note 11, at 16; see also Lina M. Khan, The Separation of Platforms and Commerce, 119
COLUM. L. REV. 973, 985-94 (2019) [hereinafter “Khan, Platforms and Commerce”].
363 HJC REPORT, supra note 11, at 274-82; Press Release, Euro. Comm’n, Antitrust: Commission Sends Statement of
Objections to Amazon for the Use of Non-Public Independent Seller Data and Opens Second Investigation into its ECommerce Business Practices (Nov. 10, 2020), https://ec.europa.eu/commission/presscorner/detail/en/ip_20_2077.
364 HJC REPORT, supra note 11, at 277-78.
365 Id.
366 Id. at 278. The European Commission has investigated similar issues. In 2020, the Commission preliminarily
concluded that Amazon had relied on aggregated data generated by third-party sellers to support its own retail
offerings. See Amazon EC Commitments, supra note 328. In December 2022, the Commission accepted Amazon’s
commitment not to use non-public data derived from third-party sellers to assist its private-label business. See id.
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their prices—an outcome that antitrust traditionally encourages.367 Others contend that the alleged
copying may have longer-term anticompetitive effects by chilling incentives to innovate.368
Self-Preferencing
Amazon’s dual role as a marketplace operator and private-label seller has led to a range of other
concerns about self-preferencing. For example, a 2016 ProPublica investigation concluded that
Amazon designed the ranking algorithm for its marketplace to favor its own offerings and
products offered by sellers that use its fulfillment services.369 The HJC Report alleged that
Amazon has engaged in other forms of self-preferencing, such as refusing to allow certain
competitors to advertise on Amazon’s platform.370
Predatory Pricing
Amazon has also been accused of engaging in predatory pricing at various points in its history.371
These allegations have been directed against several aspects of Amazon’s business, including its
sale of e-books;372 its sale of diapers and ultimate acquisition of the parent company of
Diapers.com;373 and Amazon Prime.374
In previous academic work, the current FTC Chair has argued that Amazon exemplifies the
rationality of predatory pricing in markets characterized by strong network effects and extreme
scale economies, contrary to the assumptions that underpin current doctrine.375
Other commentators have challenged these allegations.376 In response to the claims involving
Diapers.com, some have noted that Amazon has not been accused of occupying a monopolistic
share of the market for online diaper sales or diaper sales generally.377 Others have argued that the
HJC Report failed to produce sufficient evidence to conclude that Amazon prices Prime
memberships below cost.378 Commentators have also questioned whether Amazon’s critics are
367 See, e.g., Francis, supra note 63, at 832; Herbert Hovenkamp, Antitrust and Platform Monopoly, 130 YALE L.J.
1952, 2015 (2021) [hereinafter “Hovenkamp, Platform Monopoly”].
368 ARIEL EZRACHI & MAURICE E. STUCKE, HOW BIG-TECH BARONS SMASH INNOVATION—AND HOW TO STRIKE BACK
54-57 (2022). These issues are discussed in greater detail in infra “Use of Nonpublic User Data.”
369 Julia Angwin & Surya Mattu, Amazon Says It Puts Customers First. But Its Pricing Algorithm Doesn’t, PROPUBLICA
(Sept. 20, 2016), https://www.propublica.org/article/amazon-says-it-puts-customers-first-but-its-pricing-algorithmdoesnt.
370 HJC REPORT, supra note 11, at 283-86.
371 See, e.g., Shaoul Sussman, Prime Predator: Amazon and the Rationale of Below Average Variable Cost Pricing
Strategies Among Negative-Cash Flow Firms, 7 J. ANTITRUST ENFORCEMENT 203 (2019).
372 Khan, Amazon’s Antitrust Paradox, supra note 79, at 756-68.
373 Id. at 768-74; HJC REPORT, supra note 11, at 297-99.
374 HJC REPORT, supra note 11, at 299-300.
375 Khan, Amazon’s Antitrust Paradox, supra note 79, at 753, 786, 791-92.
376 Kristian Stout & Alec Stapp, Is Amazon Guilty of Predatory Pricing?, TRUTH ON THE MARKET (May 7, 2019),
https://truthonthemarket.com/2019/05/07/is-amazon-guilty-of-predatory-pricing/; Jeffrey Eisenach, Who Should
Antitrust Protect? The Case of Diapers.com, AM. ENTER. INST. (Nov. 5, 2018), https://www.aei.org/technology-andinnovation/who-should-antitrust-protect-the-case-of-diapers-com/.
377 Eisenach, supra note 376.
378 Carl Shapiro, Regulating Big Tech: Factual Foundations and Policy Goals, NETWORK L. REV. (forthcoming Fall
2023), https://www.networklawreview.org/shapiro-big-tech/.
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relying on a coherent concept of predation, contending that some of the relevant literature appears
to reject the idea that raising prices at some point is a necessary part of a predatory strategy.379
Apple
Apple is the most valuable company in the world.380 The firm designs, manufactures, and sells
iPhone smartphones, Mac personal computers, iPad tablets, and several wearables and
accessories, in addition to offering a range of related services.381 The discussion below focuses on
issues related to the company’s mobile operating system and App Store.
Allegations of Market Power
As discussed, Apple’s iOS and Google’s Android are the two dominant operating systems for
mobile devices in the United States and globally.382 More than half of the mobile devices in the
United States run a version or derivation of iOS.383 Apple’s App Store is the only method by
which software developers can distribute apps on iOS devices; Apple does not allow iOS users to
download other app stores or sidelo
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