Faced with the growing power of tech giants, a number of antitrust analysts advocate for a reversal of the burden of proof in merger review: let the acquirer prove in court that the merger is pro-competitive. I argue that such reform would likely have a significant chilling effect on mergers (which is not surprising) and in turn would likely reduce the rate of innovation (which is more controversial) and ultimately would lower consumer welfare. I respond to a series of objections to this view. I also suggest that a combination of ex ante and ex post regulation provides the best approach to rein in the high-tech giants’ excessive market power.

By Luis Cabral1

 

I. INTRODUCTION AND SUMMARY

There is general consensus among analysts, politicians and the public at large that something needs to be done about the power of, and abuse of power by, high-tech giants such as Google, Amazon, Facebook, and Apple (“GAFA”). The consensus breaks down when it comes down to specific proposals, but very few — if any — would agree that going on with business as usual is an acceptable solution.

A number of antitrust analysts — from both sides of the Atlantic and beyond — advocate for a stronger merger policy in the digital space. The so-called Stigler report (Scott-Morton, 2019), for example, calls for a reversal of the burden of proof in merger review: let the tech giants prove in court that their proposed acquisition is pro-competitive.2 Other industry experts advocate si

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