Antitrust law
How to assess market dominance when firms leverage integrated service offerings across hardware, software, and subscription platforms.
An in-depth examination explains how to measure market dominance in ecosystems that entwine devices, software, and subscription services, and why traditional metrics must adapt to platform power, audience reach, and competitive effects in intertwined markets.
July 19, 2025 - 3 min Read
When regulators evaluate market power in today’s digital ecosystems, they must look beyond single-product strength. Integrated offerings link hardware, software, and services into a cohesive user experience, creating dynamic dependencies that extend influence across multiple layers of the market. This interconnectedness can raise barriers to entry for rivals and enhance customer lock-in, complicating definitions of market boundaries. Analysts should map value chains and examine how access to complementary assets, data flows, and switching costs influence consumer choices. The goal is to identify whether a firm can meaningfully restrain competition, not merely dominate a niche by controlling one component of a broader platform stack. Clear metrics help avoid overstating market power or misallocating remedies.
Evaluating the strength of an integrated ecosystem requires instruments that capture platform effects. Traditional measures such as market share, price-cost margins, and entry barriers remain relevant but must be complemented by indicators of interdependence and network effects. For instance, the value of the platform often increases as more devices, apps, and services become compatible, reinforcing user loyalty. Conversely, disproportionate control over data or ecosystem governance can enable foreclosing behaviors that hamper rivals. Regulators should assess whether the integrated bundle creates switching constraints, whether competitors can replicate the full stack, and how quickly new entrants can offer meaningful alternatives. The assessment should be grounded in empirical evidence, not assumptions about intent.
Data and interoperability shape the competitive landscape of ecosystems.
One core dimension is market definition. When hardware, software, and subscriptions are fused, market boundaries may extend beyond a single product line to encompass an entire platform. Analysts must consider whether consumers view the ecosystem as a single product or a constellation of interoperable components. If the latter, the relevant market might be broader, potentially diluting the apparent market share of any one firm. Yet antitrust analysis must avoid conflating market power with popularity. A platform can be widely adopted without foreclosing competition if alternative stacks deliver meaningful consumer value. The challenge lies in distinguishing genuine consumer benefit from strategic advantages that arise from closed architecture or excessive control over complementary resources.
Data access and monetization are pivotal in assessing dominance. Integrated ecosystems accumulate vast quantities of user information, enabling more precise targeting and higher switching costs. When a firm controls both hardware and software, it can curate data flows in ways that entrench its position, making it harder for competitors to gain traction. Regulators should examine data portability, interoperability standards, and consent mechanisms to determine whether data advantages create durable barriers. Additionally, subscription platforms can synchronize pricing, content, and features across devices, deepening user dependence. The analysis should also address whether exclusive content or favorable terms disproportionately raise entry costs for potential rivals.
Thorough analysis considers interoperability and consumer welfare.
The governance of the ecosystem is another critical lever. Control over standards, developer tools, and app marketplaces influences who can meaningfully compete. If a firm sets terms that disadvantage third-party developers or requires exclusive arrangements to access key features, it raises concerns about abusive conduct. Enforcement of policies, transparency in decision-making, and the openness of API ecosystems affect competitive balance. Regulators should scrutinize the consistency and reasonableness of platform rules, the availability of neutral dispute resolution, and the ease with which new entrants can participate. Robust governance tends to promote competition by enabling diverse offerings while preventing self-preferencing.
An assessment framework should also analyze switching costs and user lock-in. When customers commit to a bundled ecosystem, switching to rival platforms may entail financial, operational, and compatibility considerations that extend beyond price. The presence of seamless interoperability between devices, apps, and services can either mitigate or magnify these costs. Regulators must weigh whether the ecosystem’s design preserves consumer welfare through choice and convenience or reduces it via entrenchment. The analysis should consider the friction points in migration, the availability of comparable substitutes, and the time needed for competitors to reach parity in functionality and usability.
Remedies focus on fair access, interoperability, and accountability.
Competition authorities should evaluate entry dynamics for new platforms seeking to challenge an entrenched ecosystem. Barriers to entry can be multi-faceted, including capital requirements, access to essential APIs, and the credibility of supporting content ecosystems. The speed with which a challenger can assemble a viable alternative matters: if switching costs are modest and consumers can readily adopt competing offerings, market power may be more ephemeral. Conversely, if the incumbent controls key distribution channels or secures exclusive access to critical infrastructure, it becomes substantially harder for rivals to gain a foothold. A forward-looking assessment helps quantify the risk of entrenchment and informs proportionate remedies that preserve incentives to innovate.
Consumer welfare remains the touchstone of antitrust evaluation. Even when market power exists in an integrated bundle, the central question is whether competition fosters efficiency, lower prices, higher quality, and greater innovation. In ecosystems, quality is not only about product features but also about reliability, privacy, and user experience. Regulators should examine how the integration affects these dimensions over time. Remedies might include mandating interoperability, prohibiting exclusive agreements that foreclose rivals, or imposing behavioral constraints that prevent self-preferencing. The goal is to maintain a dynamic marketplace where multiple viable pathways to value coexist with consumer-friendly incentives to innovate.
Clear guidelines and calibrated remedies support ongoing innovation.
The complexity of an integrated platform also demands careful evidence collection. Data on user behavior, cross-platform usage, and monetization pathways can illuminate whether the ecosystem favors a single provider at the expense of rivals. Investigations should employ a mix of qualitative and quantitative methods, including econometric analyses, access to platform governance documents, and interviews with developers and industry insiders. This robust evidentiary base helps avoid misinterpretation of strategic moves as mere product differentiation. While case-specific, the findings should contribute to a principled, predictable framework for evaluating market power within multi-layered offerings.
Finally, any enforcement plan must consider proportionate, scalable interventions. Remedies should align with the severity of the deviation from competitive norms and the degree of harm to consumers. In some cases, structural remedies such as divestitures or platform-unbundling could be appropriate, while in others, behavioral constraints and ongoing monitoring suffice. The objective is to restore competitive dynamics without undermining legitimate efficiencies created by integration. Regulators should also publish clear guidelines so firms anticipate how market power will be judged in evolving digital ecosystems, ensuring consistency and predictability in enforcement.
A comprehensive assessment framework begins with precise market definition, then expands to governance, data dynamics, and consumer welfare. Each dimension must be evaluated through transparent methodologies that withstand scrutiny and cross-border comparison. Jurisdictions may differ in how they balance the goals of encouraging innovation with safeguarding competition, but shared principles—openness, interoperability, and accountability—can harmonize approaches. The outcome should be a well-justified determination of whether an integrated ecosystem exercises dominance in a manner that harms rivals or ultimately benefits consumers. With rigorous standards, regulators can respond adaptively to new platform configurations as technology evolves.
As markets become increasingly integrated, the line between products and platforms blurs. Where firms offer hardware, software, and subscriptions in a single package, assessing market power requires a holistic view of the ecosystem’s incentives, governance, and outcomes. The paradigm shifts from analyzing discrete offerings to understanding how an entire stack collaborates to shape competitive pressure. Steady, evidence-based evaluation ensures that measures targeted toward preserving competition do not stifle innovation. In this way, antitrust policy can adapt to modern ecosystems, safeguarding consumer choice while encouraging ongoing investment in new, meaningful improvements.
