Friday, September 7, 2007
Posted by D. Daniel Sokol
Scott Wallsten of the Progress & Freedom Foundation and Stanford University suggests that regulators may fall into a potential intellectual trap if they view the proposed Xm-Sirius merger as that of a single sided market rather than a double sided market in his paper Antitrust, Two-Sided Markets, and Platform Competition: The Case of the Xm-Sirius Merger, which he filed before the FCC in the case.
ABSTRACT: On July 9, 2007 The Progress & Freedom Foundation's Scott Wallsten filed comments regarding the proposed XM-Sirius merger at the Federal Communications Commission (FCC), explaining that this merger poses unique new challenges for antitrust officials.
Specifically, companies like Sirius and XM are platforms in two-sided markets that must attract subscribers and content providers, both of whom can choose among a variety of platforms. In addition, the platforms themselves are dynamic in that they can potentially carry any digital information, not just the services they currently offer.
A merger analysis of competing platforms that considers only a single component in this complex market is likely to reach an incorrect conclusion. In the case of the XM-Sirius merger, officials should consider not only subscribers, but also content providers, competing platforms, platforms that are potential competitors, and services the platforms in question may provide in the future that they do not today.