Competition Law and Market Concentration in Ecosystem Economies

1. Introduction

Ecosystem economies arise where a firm does not compete through a single product or service but controls, coordinates, or significantly influences a network of complementary products, platforms, infrastructure, data, applications, distribution channels, and users.

Examples include:

• mobile-device ecosystems;
• app stores and operating systems;
• cloud-computing ecosystems;
• e-commerce and logistics ecosystems;
• digital advertising ecosystems;
• payment and fintech ecosystems;
• AI and data ecosystems;
• enterprise software ecosystems;
• connected-car and EV ecosystems; and
• gaming ecosystems.

Competition law traditionally examines relevant markets, market shares, barriers to entry, dominance, exclusionary conduct and consumer effects. Ecosystems complicate this analysis because market power may arise from the interaction of several interconnected markets rather than from dominance in only one product market.

The European Commission's current market-definition framework expressly recognises that a digital ecosystem can consist of interlinked products that are horizontally or vertically complementary, citing Google Android as an example.

2. Meaning of Market Concentration in an Ecosystem Economy

Market concentration ordinarily measures how much economic activity is controlled by a small number of firms.

Traditional indicators include:

• market shares;
• concentration ratios;
• HHI;
• barriers to entry;
• switching costs;
• network effects; and
• countervailing buyer power.

In an ecosystem economy, however, concentration may exist at multiple layers.

Example

Consider a smartphone ecosystem:

Device → Operating System → App Store → Payment System → Cloud → Advertising → Data → AI Services

A firm may have only moderate market share in one layer while possessing substantial strategic power because it controls the connections between several layers.

Thus:

Ecosystem concentration = concentration at individual market layers + control over critical interfaces connecting those layers.

This is particularly important where the same firm controls the gateway through which competitors must reach customers.

3. Characteristics of Ecosystem Concentration

A. Multi-market concentration

An ecosystem operator may simultaneously participate in:

1. hardware;
2. operating systems;
3. applications;
4. payments;
5. advertising;
6. cloud services;
7. data processing; and
8. AI services.

The competitive concern is not necessarily that every individual market is monopolised.

Instead, the concern may be that control across several adjacent markets reinforces the firm's position.

B. Network effects

Network effects occur when the value of a service increases as more users or complementors participate.

For example:

More users → more developers → more applications → greater consumer attraction → more users

This can produce a self-reinforcing competitive structure.

The Google Android litigation specifically recognised the significance of network effects and switching costs within the Android ecosystem.

C. Switching costs

Consumers may find it difficult to leave an ecosystem because they have accumulated:

• purchased applications;
• subscriptions;
• data;
• contacts;
• digital content;
• loyalty benefits;
• connected devices;
• enterprise integrations; or
• learned behaviour.

Consequently, a competitor may have difficulty entering even if its product is technically superior.

D. Data concentration

An ecosystem operator can collect data from multiple services.

For example:

Search data + location data + payment data + browsing data + advertising data + device data

can generate competitive advantages that an independent rival cannot easily reproduce.

Data concentration may therefore reinforce traditional market concentration.

4. Ecosystem Market Power

Ecosystem power can arise through several mechanisms.

1. Gateway control

The firm controls access to customers.

Examples:

• app stores;
• operating systems;
• search engines;
• payment gateways;
• cloud platforms;
• online marketplaces.

2. Vertical integration

The ecosystem owner operates at several levels of the supply chain.

3. Bundling and tying

A dominant service may be linked to another service.

4. Self-preferencing

The platform gives its own downstream service preferential treatment.

5. Exclusive access

Competitors may be denied access to:

• data;
• APIs;
• interoperability;
• distribution;
• technical functionality; or
• customers.

6. Acquisition of emerging rivals

An ecosystem owner may acquire firms that could become future competitive threats.

5. Relevant Market Definition

One of the most difficult questions is whether an ecosystem should be treated as:

Model 1 — Multiple separate markets

For example:

• operating-system market;
• app-store market;
• mobile-payment market;
• advertising market.

Model 2 — A single ecosystem

The entire interconnected system is treated as the relevant competitive structure.

Model 3 — Core market plus ecosystem effects

Competition law identifies individual relevant markets but considers ecosystem characteristics when assessing:

• dominance;
• barriers to entry;
• foreclosure;
• efficiencies;
• competitive effects; and
• remedies.

The third approach is particularly important because an ecosystem does not automatically constitute a legally separate relevant market.

The European Commission's 2024 Market Definition Notice expressly discusses digital ecosystems and identifies Google Android as an example.

6. Six Major Case Laws

Case 1 — Google Android

Google LLC and Alphabet Inc. v European Commission, Case T-604/18

This is one of the most important cases for ecosystem competition.

The European Commission found competition-law concerns involving Google's Android ecosystem, including:

• Android licensing arrangements;
• Google Search;
• Chrome;
• Google Play;
• device manufacturers;
• mobile network operators;
• exclusivity payments; and
• anti-fragmentation arrangements.

The General Court examined the case as involving a multi-sided platform and ecosystem, rather than treating Android as an isolated product.

Competition-law significance

The case demonstrates how dominance in one ecosystem component can potentially reinforce competitive power in complementary products.

It is particularly relevant to:

• tying;
• leveraging;
• exclusivity;
• network effects;
• switching costs;
• interoperability; and
• ecosystem foreclosure.

Case 2 — Google Shopping

Google Search (Shopping), Case AT.39740

The European Commission addressed Google's treatment of competing comparison-shopping services in search results.

The central competition concern involved Google's preferential positioning of its own comparison-shopping service relative to competing services.

Ecosystem relevance

Search can function as a gateway to other markets.

Thus:

Search dominance → traffic control → downstream advantage

can potentially allow an ecosystem operator to extend market power beyond the original market.

The Commission's later ecosystem-related market-definition materials continue to cite Google Shopping in considering digital ecosystems.

Principle

A dominant platform's control over an important interface can create competitive concerns when it uses that position to favour its own downstream activities.

Case 3 — Microsoft

United States v Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001)

Microsoft is an important historical precedent for ecosystem concentration.

Microsoft possessed substantial power in PC operating systems and used contractual and technical strategies concerning Internet Explorer and competing browsers.

The court found unlawful maintenance of monopoly power.

The FTC's explanation of the case notes that Microsoft used its operating-system position in ways that disadvantaged competing browser technologies and developers.

Ecosystem significance

The case illustrates:

Core platform dominance → control over complementary product distribution → foreclosure of rivals

It therefore provides an important foundation for understanding modern ecosystem competition.

Case 4 — Amazon Marketplace

FTC and State Attorneys General v Amazon.com, Inc., No. 2:23-cv-01495

The U.S. FTC and 18 states sued Amazon alleging that Amazon maintained monopoly power through a collection of interconnected strategies affecting:

• sellers;
• consumers;
• pricing;
• marketplace competition;
• logistics;
• advertising; and
• rival platforms.

The FTC characterises the alleged conduct as a collection of interlocking strategies, rather than a single isolated practice.

Ecosystem significance

Amazon illustrates the importance of examining:

Marketplace + sellers + logistics + advertising + fulfilment + consumer access

as interconnected components.

The case therefore demonstrates why concentration in ecosystem economies may not be adequately understood through one narrow market-share figure.

Case 5 — Apple App Store / Music Streaming

Apple – App Store (music streaming), Case AT.40437

The European Commission investigated Apple's App Store rules concerning music-streaming applications.

The concern involved Apple's role as both:

• operator of the app-distribution ecosystem; and
• provider of competing services.

The Commission's ecosystem analysis has subsequently referred to the case when discussing digital ecosystems.

Ecosystem significance

The fundamental structural concern is:

The ecosystem operator controls access to downstream competitors while simultaneously competing with those competitors.

This creates a potential platform-owner-versus-platform-participant conflict.

The issue becomes particularly significant where the platform controls:

• ranking;
• app distribution;
• payments;
• commissions;
• technical access;
• consumer relationships.

Case 6 — Facebook / Meta and Facebook Marketplace

Facebook Marketplace, Case AT.40684

The European Commission examined Facebook Marketplace in the context of Meta's broader digital ecosystem.

The Commission's market-definition materials expressly cite the Facebook Marketplace decision when discussing digital ecosystems.

Ecosystem significance

The case demonstrates the relevance of:

• user data;
• social-network effects;
• platform access;
• adjacent services;
• advertising relationships; and
• self-reinforcing ecosystem advantages.

A social platform can potentially use its enormous user base as an input into expansion into adjacent markets.

7. Additional Important Case — Epic Games v Apple

Epic Games, Inc. v Apple Inc., 67 F.4th 946 (9th Cir. 2023)

The dispute concerned Apple's App Store ecosystem and restrictions imposed on developers.

The case is particularly significant for analysing:

• app distribution;
• payment systems;
• platform rules;
• developer access;
• commissions;
• alternative payment channels; and
• platform governance.

It illustrates the tension between:

ecosystem integration and security

on one side and

contestability and alternative distribution

on the other.

8. Ecosystem Concentration and Merger Control

Traditional merger control asks:

Will the transaction substantially lessen competition in the relevant market?

For ecosystems, authorities may additionally consider:

A. Portfolio effects

Will the merged company control several complementary services?

B. Data advantages

Will the transaction combine datasets that competitors cannot replicate?

C. Network effects

Will the acquisition increase the ecosystem's user or developer base?

D. Vertical foreclosure

Could the merged firm disadvantage rivals upstream or downstream?

E. Nascent competition

Could the acquired company have become a significant future competitor?

F. Interoperability

Could the merged firm restrict compatibility with competing ecosystems?

9. Ecosystem Concentration and the "Killer Acquisition" Problem

A large ecosystem may acquire many small companies.

Each acquisition may appear insignificant when considered independently.

Collectively, however, acquisitions may produce:

Acquisition → integration → data accumulation → user expansion → stronger ecosystem → higher entry barriers

The FTC's examination of acquisitions by major technology companies between 2010 and 2019 illustrates why acquisitions below traditional notification thresholds can be relevant to understanding technological concentration.

10. Ecosystem Concentration and Essential Facilities

A particularly difficult issue arises where a platform becomes an unavoidable gateway.

Examples could include:

• mobile operating systems;
• app stores;
• cloud infrastructure;
• payment infrastructure;
• digital identity systems;
• interoperability interfaces.

A competition authority may then examine whether denying access or imposing discriminatory access conditions harms competition.

However, dominance alone does not automatically create an obligation to provide access. The legal test depends upon the applicable jurisdiction and doctrine.

11. Ecosystem Concentration and Interoperability

Interoperability is increasingly important.

Suppose:

Platform A

controls:

• operating system;
• messaging;
• payments;
• cloud;
• AI assistant.

If competing services cannot communicate or access important technical functions, consumers may become locked into Platform A.

The EU's DMA specifically addresses interoperability and data portability for designated gatekeepers, including requirements intended to prevent gatekeepers from retaining exclusive access to certain operating-system functionalities.

12. Ecosystem Concentration and Cloud Computing

Cloud computing demonstrates how ecosystem concentration can expand into infrastructure.

Cloud providers increasingly offer:

• computing;
• storage;
• databases;
• AI models;
• cybersecurity;
• developer tools;
• enterprise software;
• data analytics.

The EU announced in June 2026 a preliminary view that AWS and Microsoft Azure should be designated as gatekeepers for cloud computing under the DMA, citing their scale, entrenched user bases, switching costs, lock-in effects and broader ecosystems.

This illustrates the movement from analysing an isolated cloud market toward examining ecosystem-level gateway power.

13. Ecosystem Concentration and Self-Preferencing

Self-preferencing becomes especially significant where the ecosystem owner operates competing services.

Structural situation

Platform controls ranking/access

↓

Platform owns downstream service

↓

Platform's service receives preferential treatment

↓

Independent rivals lose visibility/access

↓

User migration toward platform-owned service

↓

Greater ecosystem concentration

This was central to the broader concerns surrounding Google Shopping and continues to be addressed under newer digital-market regulation.

14. Ecosystem Concentration and Consumer Welfare

Competition authorities should examine more than price.

Ecosystem competition can affect:

Price

• commissions;
• subscription charges;
• advertising prices.

Quality

• privacy;
• security;
• service quality.

Innovation

• development of competing technologies;
• investment by startups.

Choice

• number of available applications;
• payment alternatives;
• distribution alternatives.

Privacy

Greater concentration may increase the ability to collect and combine personal or behavioural data.

15. HHI and Ecosystem Markets

The Herfindahl-Hirschman Index (HHI) remains useful but may be insufficient.

For example:

A conventional market-by-market analysis may produce four separate concentration assessments.

An ecosystem analysis additionally asks:

Does Firm A's position in OS, app distribution and payments reinforce its position across the ecosystem?

That is the critical analytical difference.

16. Ecosystem Power Matrix

17. Competition-Law Tests Applicable to Ecosystems

A regulator or court can generally ask:

Step 1 — What is the relevant market?

Identify:

• product/service;
• geographic scope;
• customer group;
• platform sides.

Step 2 — Is there substantial market power?

Consider:

• market share;
• entry barriers;
• network effects;
• switching costs;
• data;
• infrastructure;
• countervailing power.

Step 3 — What is the ecosystem structure?

Map:

Core service → complementary services → infrastructure → users → data → distribution

Step 4 — Is the firm a gateway?

Determine whether competitors depend upon the firm's infrastructure or customer interface.

Step 5 — Is power being leveraged?

Investigate:

• tying;
• bundling;
• exclusivity;
• self-preferencing;
• discrimination;
• refusal to deal;
• interoperability restrictions.

Step 6 — Are competitors being foreclosed?

Assess:

• actual foreclosure;
• potential foreclosure;
• entry barriers;
• innovation effects;
• consumer choice.

Step 7 — Are there legitimate efficiencies?

Possible justifications include:

• security;
• privacy;
• technological integration;
• reduced transaction costs;
• quality improvements;
• fraud prevention.

18. Modern Regulatory Development

The European Union's Digital Markets Act demonstrates the increasing importance of ecosystem concentration.

The Commission originally designated six gatekeepers—Alphabet, Amazon, Apple, ByteDance, Meta and Microsoft—and subsequently expanded the designation framework to additional services.

The UK has likewise been developing ecosystem-focused digital-market oversight. Its CMA currently identifies open strategic-market-status work concerning Google's mobile platform, Apple's mobile platform and Microsoft's business-software ecosystem.

These developments demonstrate a shift from purely retrospective antitrust enforcement toward ex ante regulation of structurally powerful ecosystems.

19. Remedies for Ecosystem Concentration

Possible remedies include:

Structural remedies

• divestiture;
• separation of business units;
• restrictions on acquisitions.

Behavioural remedies

• non-discrimination;
• access obligations;
• transparency;
• prohibition of self-preferencing.

Interoperability remedies

• API access;
• technical interoperability;
• data portability.

Contractual remedies

• prohibition of exclusivity;
• restrictions on parity clauses;
• fair dealing obligations.

Merger remedies

• divestiture commitments;
• licensing;
• interoperability commitments;
• firewall arrangements.

The appropriate remedy depends on the theory of harm; merely imposing access obligations may not solve a problem created by structural control over several interconnected markets.

20. Six-Core-Case Revision Table

21. Key Legal Principles

The principal lessons are:

1. Market share alone may understate ecosystem power.
2. Network effects can reinforce concentration over time.
3. Switching costs can make an apparently contestable market difficult to enter.
4. Control over a gateway can confer power over complementary markets.
5. Vertical integration can create both efficiencies and foreclosure risks.
6. Self-preferencing becomes particularly important when the platform competes with its own users.
7. Data accumulation can reinforce ecosystem advantages.
8. Interoperability can be central to contestability.
9. Merger analysis must consider portfolio and ecosystem effects where appropriate.
10. Ecosystem analysis should not automatically replace conventional relevant-market analysis; rather, ecosystem characteristics can inform market definition, dominance and competitive-effects analysis.

22. Conclusion

Market concentration in ecosystem economies represents a structural evolution of competition problems. The relevant question is no longer merely whether one company has a large share of one market. It is increasingly necessary to examine whether a company controls a network of complementary markets and the gateways connecting them.

The most important competition-law concepts are therefore:

Market concentration + network effects + switching costs + data + vertical integration + gateway control + interoperability + self-preferencing + acquisitions

The Google Android, Google Shopping, Microsoft, Amazon, Apple App Store and Facebook Marketplace matters demonstrate different aspects of this problem.

The emerging regulatory approach, particularly in the EU and UK, increasingly recognises that ecosystem power can persist and expand because control in one layer reinforces control in adjacent layers. The EU's current framework expressly incorporates the concept of digital ecosystems, while newer ex ante rules address contestability, interoperability and gateway power.