Platform Annexation

We introduce the concept of platform annexation, whereby a platform annexes multi-homing tools or other adjacent products in a way that interferes with multi-homing by users, lessening competition. Traditional analysis of mergers often falls back on a simple categorization of conduct into horizontal and vertical. We argue that platform annexation, by changing the nature of multi-homing, directly weakens horizontal competition. In this way it is more similar to direct foreclosure between head to head competitors that harms consumers. In particular, while traditional vertical integration in a supply chain has the potential to reduce conflicts of interest and may favor efficiency, platform annexation creates conflicts of interest and has the potential to reduce efficiency, particularly when undertaken by a market leader who has the incentive to reduce multi-homing. Thus, platform annexation should be viewed with substantial skepticism by regulators and enforcers.