This brief glossary describes some of the tactics commonly used by dominant corporations to acquire and maintain power over relevant markets.
DOWNLOAD THE GLOSSARYDominant corporations use many tactics to acquire and maintain power over relevant markets. The inexhaustive list below describes tactics commonly deployed in a broad range of sectors. Corporations will often employ several of these in concert or use power from one line of business to acquire market share in another.
Forms of anticompetitive, horizontal agreements, or cartel behavior, in which corporations use their market power to their benefit at the expense of consumers or other businesses. Price-fixing, bid rigging, and market allocation are all forms of such agreements that violate the Sherman Act, America’s most prominent antimonopoly law, and may be criminally prosecuted five years from occurrence. One recent example is an alleged deal between Facebook and Google to divide the online advertising market between them.[1]
An informal integration of products and services, restricting the ability of a signee to work with other parties. These ultimately restrict the freedom of business operations and are most common between parties along a supply chain. Gore-Tex, for instance, forced users of its breathable fabric not to work with any competitors who made rival material.[2]
The imitation of a product or service by a dominant corporation so that it closely resembles a rival’s successful product or service. For example, Amazon is well known for launching copycat products after third-party merchants successfully market and sell original versions through its store.[3]
A business strategy or model used by middlemen to unnecessarily extract a percent of a transaction. The practice is often abusive and allows monopolistic corporations to accentuate their market power by demanding unfair cuts of such transactions. Apple pioneered this tactic with its app store model, but tollbooths are increasingly common across a range of markets.
The anti-competitive practice of using below-cost pricing to undercut rivals or market entrants, gain market share, and then use that market power to set above-market level prices or fees. Predatory pricing is technically illegal, but rarely enforced, as U.S. case law now requires plaintiffs to prove that a corporation could or did “recoup” its losses on the underpriced goods. This view ignores the way a monopolist such as Amazon might use predatory pricing to gain market power beyond a specific product, which may bolster other, tangential lines of revenue, potentially in different markets.
A dominant entity’s actions or conduct designed to favor its own products or services over those of its competitors. When a dominant corporation is self-preferencing, it often has exclusionary effects on firms trying to compete or enter a market. For example, Google preferences its own search verticals, such as Google Shopping[4] or its business listings, over specific shopping verticals or business search verticals such as Yelp.[5]
A practice defined in U.S. law as “an agreement by a party to sell one product but only on the condition that the buyer also purchases a different (or tied) product, or at least agrees that he will not purchase that product from any other supplier.” It is often used to exclude competitors by leveraging dominance in one market into dominance in another market, as described above when Microsoft tied Teams to its other office products.
Mergers, acquisitions, or other actions that combine corporations at different stages of a supply chain to create dominance over an entire ecosystem of supply. For example, the chicken industry is vertically integrated, with major processors also owning the inputs — chicken stock and feed mills — that are sold to farmers.
[1] Gilad Edelman, “Texas Accuses Google and Facebook of an Illegal Conspiracy,” Wired, December 16, 2020. https://www.wired.com/story/texas-accuses-google-facebook-illegal-conspiracy/
[2] Mike Kessler, “Insane in the Membrane,” Outside, March 7, 2012. https://www.outsideonline.com/1898541/insane-membrane
[3] Jaron Schneider, “Peak Design Calls Out Amazon for ‘Copycatting’ the Everyday Sling Bag,” PetaPixel, March 3, 2021. https://petapixel.com/2021/03/03/peak-design-calls-out-amazon-for-copycatting-the-everyday-sling-bag/
[4] Karen Gilchrist and Anita Balakrishnan, “EU hits Google with a record antitrust fine of $2.7 billion,” CNBC, June 27, 2019. https://www.cnbc.com/2017/06/27/eu-hits-google-with-a-record-antitrust-fine-of-2-point-7-billion.html
[5] Lauren Feiner, “Yelp gives senators its list of grievances against Google in antitrust hearing,” CNBC, March 10, 2020. https://www.cnbc.com/2020/03/10/yelp-testifies-against-google-in-antitrust-senate-hearing.html
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