Zingales & Renzetti on Digital Platform Ecosystems and Conglomerate Mergers: A Review of the Brazilian Experience

Nicolo Zingales (Getulio Vargas Foundation (FGV); Tilburg Law and Economics Center (TILEC); Stanford University – Stanford Law School Center for Internet and Society) and Bruno Renzetti (Yale University, Law School; University of Sao Paulo (USP), Faculty of Law (FD)) have posted “Digital Platform Ecosystems and Conglomerate Mergers: A Review of the Brazilian Experience” (World Competition 45 (4) (2022)) on SSRN. Here is the abstract:

This paper highlights some of the key challenges for the Brazilian merger control regime in dealing with mergers involving digital platform ecosystems (DPEs). After a quick introduction to DPEs, we illustrate how conglomerate effects that are raised by such mergers remain largely unaddressed in the current landscape for merger control in Brazil. The paper is divided in four sections. First, we introduce the reader to the framework for merger control in Brazil. Second, we identify the possible theories of harm related to conglomerate mergers, and elaborate on the way in which their application may be affected by the context of DPEs. Third, we conduct a review of previous mergers involving DPEs in Brazil, aiming to identify the theories of harm employed (and those that could have been explored) in each case. Fourth and finally, we summarize and results and suggest adaptations to the current regime, advancing proposals for a more consistent and predictable analysis.

Lemert on Facebook’s Corporate Law Paradox

Abby Lemert (Yale Law School) has posted “Facebook’s Corporate Law Paradox” on SSRN. Here is the abstract:

In response to the digital harms created by Facebook’s platforms, lawmakers, the media, and academics repeatedly demand that the company stop putting “profits before people.” But these commentators have consistently overlooked the ways in which Delaware corporate law disincentives and even prohibits Facebook’s directors from prioritizing the public interest. Because Facebook experiences the majority of the harms it creates as negative externalities, Delaware’s unflinching commitment to shareholder primacy prevents Facebook’s directors from making unprofitable decisions to redress those harms. Even Facebook’s attempt to delegate decision-making authority to the independent Oversight Board verges on an unlawful abdication of corporate director fiduciary duties. Facebook’s experience casts doubt on the prospects for effective corporate self-regulation of content moderation, and more broadly, on the ability of existing corporate law to incentivize or even allow social media companies to meaningfully redress digital harms.