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1 1 (July 21, 2020)

handle is hein.crs/govdazg0001 and id is 1 raw text is: Researh Sevice Competition in Digital Markets: Vertical Integration and Acquisitions July 21, 2020 Competition in digital markets is drawing attention from Congress, foreign regulators, and antitrust authorities. The House Judiciary Committee opened an investigation of digital markets in 2019. The same year, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) reportedly opened antitrust investigations into four companies-Alphabet, Amazon, Apple, and Facebook. These firms, along with Microsoft, are currently the most valuable publicly traded companies in the United States, and are often referred to as Big Tech. Possible issues in the pending investigations may include the effects of vertical integration and acquisitions on competition. On June 30, 2020, the DOJ and FTC released new Vertical Merger Guidelines. The guidelines outline the agencies' approach to examining mergers and acquisitions at different stages of a supply chain. The guidelines do not explicitly address digital markets, leaving it unclear how these agencies are examining Big Tech in their investigations. This CRS Insight analyzes competition issues raised by vertical integration in digital markets and how acquisitions involving Big Tech may differ from those in other industries. A companion CRS Legal Sidebar provides a general overview of vertical merger enforcement and discusses the implications of the new guidelines. Identifying Supply Chains and Markets In markets for physical products, vertical relationships tend to be clearly defined as goods flow from commodity producers to processors to distributors, and then to consumers. In digitalmarkets, these distinctions tend to be less clear. For example, some users of websites and apps-such as Facebook's Instagram and Alphabet's YouTube-are paid to post images and videos if they obtain a certain number of followers, meaning these users serve as both consumers and suppliers. The difficulty of defining supply chains for digital markets can make it challenging to determine when vertical integration may be harmful to competition. For example, a company that publishes books might try to integrate vertically by purchasing the only company that makes a certain type of paper; antitrust authorities might then investigate how the acquisition affects competition with other publishers and prices faced by book buyers. In digital markets, companies have built assets, such as fiber optic cables and satellites, to transmit their data, possibly faster or more reliably than competitors who do not own such infrastructure. Content providers like Alphabet, Amazon, Facebook, and Microsoft collectively own or Congressional Research Service https://crsreports.congress.gov INI 1462 CRS MNS GHT Prepared ior M:blembersand Com0 n.. teesoe on mcC n ------------------------------------------------------------------------------------------------------------------------------------....................................----------------------------------

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