Competition Law and Algorithmic Conglomerate Market Power

1. Introduction

Algorithmic conglomerate market power describes a competition-law problem that can arise when a large business operates across several related digital markets and uses algorithms, data, platforms, operating systems, advertising systems, recommendation tools, or other technological assets from one market to strengthen its position in another.

Traditional conglomerate power concerns a firm selling different but related products—for example, software, hardware, advertising, and communications services. In modern digital markets, the relationship can become stronger because algorithms connect those products. Search rankings, recommendation systems, default settings, interoperability rules, advertising algorithms, and accumulated user data can allow an undertaking to coordinate its ecosystem across several markets.

Competition law does not prohibit a company merely because it operates in many markets or uses sophisticated algorithms. The concern arises where market power in one area is leveraged in ways capable of foreclosing competitors, raising entry barriers, reinforcing dominance, or substantially reducing effective competition.

In EU competition law, these questions can arise particularly under Article 102 TFEU for abuse of dominance and under the EU Merger Regulation when authorities examine conglomerate effects of mergers.

2. Meaning of Algorithmic Conglomerate Market Power

A conglomerate digital undertaking may simultaneously control several complementary products, such as:

• an operating system;
• an app distribution platform;
• a search engine;
• online advertising technology;
• cloud infrastructure;
• social-network services;
• consumer devices;
• payment infrastructure; and
• large datasets used for algorithmic optimisation.

Algorithms can connect these activities.

For example, a company dominant in a mobile operating system might operate an algorithm that determines which applications receive prominent placement. If its own applications receive preferential positioning, its power in the operating-system market could potentially be leveraged into an adjacent application market.

The Commission's analysis of conglomerate effects generally focuses on whether a firm has the ability and incentive to foreclose competitors and whether the strategy would significantly harm competition.

3. Sources of Algorithmic Conglomerate Power

Data Combination

A conglomerate may collect information through several services and combine those datasets.

Suppose Company X controls:

Search → Maps → Video → Mobile OS → Advertising → Wearables

Data generated by each service can potentially improve algorithms operating elsewhere in the ecosystem.

This may create a feedback mechanism:

More users → more data → improved algorithms → better services or targeting → more users → additional data

Such feedback does not automatically violate competition law. It becomes particularly relevant where rivals cannot reasonably reproduce the relevant data, distribution, interoperability, or network advantages.

The Google/Fitbit investigation illustrates this issue. The Commission considered not only traditional market overlaps but also Google's and Fitbit's databases, advertising-related implications, Android interoperability, and possible conglomerate leveraging into wearable devices.

4. Algorithmic Tying and Bundling

A powerful digital conglomerate can integrate complementary services technically rather than simply selling them together.

Consider:

Dominant Platform A + Algorithmic Service B

The platform could potentially:

• pre-install B;
• make B the default;
• provide B with superior interoperability;
• restrict competing services' API access;
• rank B more prominently; or
• make switching to competitors more difficult.

Competition authorities therefore examine whether technical integration represents legitimate product improvement or exclusionary tying/bundling.

The distinction is important because integration frequently produces efficiencies such as convenience, lower transaction costs and improved functionality. The EU's current Article 102 framework expressly recognizes that integration can generate benefits while also permitting scrutiny where tying or bundling is capable of restricting competition.

5. Algorithmic Self-Preferencing

Self-preferencing occurs where an undertaking controlling an important intermediary platform gives its own downstream service more favorable treatment than competing services.

Algorithmic forms may involve:

Search ranking → recommendation → visibility → traffic → transactions

A platform might therefore influence downstream competition without expressly excluding competitors.

Competition analysis examines matters such as:

• importance of the platform;
• differences in treatment;
• user behavior;
• network effects;
• barriers to entry;
• access to alternative distribution channels; and
• actual or potential foreclosure.

The Google Shopping litigation is particularly important because EU courts examined Google's treatment of its own comparison-shopping service relative to competing comparison-shopping services. The Court of Justice upheld the Commission's finding in 2024.

6. Ecosystem Entrenchment

Conglomerate power can also develop through an integrated ecosystem.

Imagine:

Device → OS → App Store → Search → Payment → Cloud → AI/Recommendation System

Consumers may benefit substantially from such integration. However, competition concerns can arise where competitors need access to several interconnected components simultaneously to compete effectively.

A new entrant may therefore face what can be described as a multi-market entry problem: entering one market is insufficient because competitive success requires simultaneous access to complementary markets, technology or customers.

The Commission's current Article 102 guidance recognizes that tying or bundling can sometimes increase entry costs by making successful entry in one market dependent upon successful entry in another.

Important Case Laws and Decisions

1. Microsoft Corp. v Commission — Case T-201/04

This is one of the foundational cases for understanding technological ecosystem power.

Microsoft held a very strong position in PC operating systems. Competition concerns included interoperability information and the integration of Windows Media Player with Windows.

The General Court upheld important parts of the Commission's case concerning Microsoft's conduct.

For algorithmic conglomerate markets, the case demonstrates that technological integration cannot automatically immunize conduct from competition-law scrutiny. Where control over one important technological platform affects competition in a complementary market, interoperability, distribution advantages and network effects may become central considerations.

The case remains particularly relevant to modern operating systems, digital ecosystems, APIs and interconnected software products.

2. Google and Alphabet v Commission — Google Android

Case T-604/18, followed by the 2026 Court of Justice judgment in Case C-738/22 P, is especially relevant to ecosystem-based market power.

The dispute concerned Android-related practices, including contractual arrangements surrounding Google's mobile services.

The litigation demonstrates how competition analysis may consider interconnected conduct across an ecosystem rather than viewing every technological practice completely separately.

The Court of Justice's July 2026 judgment is particularly significant because it recognized that where different behaviors are interconnected and operate together, artificially separating their competitive effects may be inappropriate.

This principle is highly relevant to algorithmic conglomerates because operating systems, defaults, search algorithms, app distribution and data collection can operate as components of one broader competitive strategy.

3. Google and Alphabet v Commission — Google Shopping

Cases T-612/17 and C-48/22 P

Google's general search service and its comparison-shopping service operated in related but distinct areas.

The central competition concern involved Google's treatment of its own comparison-shopping service compared with competing comparison-shopping services.

The General Court upheld the Commission's decision in 2021, and the Court of Justice upheld the judgment in September 2024.

The case is important for algorithmic conglomerate power because ranking and presentation systems can determine commercial visibility. An intermediary controlling an important algorithmic gateway may therefore potentially influence competition in neighboring markets through differential treatment.

4. Google/Fitbit — Case M.9660

The European Commission approved Google's acquisition of Fitbit in 2020 subject to commitments.

The investigation is a particularly useful example of modern conglomerate analysis.

The Commission considered several dimensions, including:

Google ecosystem + Fitbit wearable devices + Fitbit data + advertising + Android

One concern involved Google's ability to leverage its Android position into wrist-worn wearable devices.

The Commission considered whether Google could degrade Android APIs available to third-party wearable manufacturers while reserving functionality for its own devices.

It also investigated the combination of Google and Fitbit datasets and possible advertising implications.

The transaction therefore illustrates how modern conglomerate analysis can cover data accumulation, APIs, interoperability, advertising algorithms and ecosystem leveraging simultaneously.

5. Tetra Laval BV v Commission

The Tetra Laval/Sidel litigation is a foundational authority concerning conglomerate mergers.

The transaction combined businesses operating in different but related packaging markets. The Commission feared that Tetra Laval could leverage its strong position into another market.

The European courts required a sufficiently convincing evidential basis for predicted conglomerate foreclosure.

Its continuing importance lies in the proposition that competition authorities cannot simply assume:

Strong position in Market A + presence in Market B = unlawful conglomerate power.

They must establish a credible mechanism through which the transaction could produce anticompetitive effects.

This evidentiary discipline remains important when authorities evaluate predictive theories involving algorithms, AI systems or data-driven ecosystems.

6. General Electric/Honeywell

The proposed GE/Honeywell merger became another major conglomerate-effects case.

The Commission was concerned about the combination of GE's aircraft-engine activities with Honeywell's avionics and other aerospace products. Bundling and portfolio effects formed an important part of the competitive analysis.

The transaction became particularly controversial because EU and US authorities reached different conclusions.

Subsequent European litigation scrutinized significant parts of the Commission's conglomerate reasoning.

The case remains useful because it demonstrates both the potential significance and the evidentiary difficulty of theories based on portfolio power, bundling and leveraging across complementary markets.

7. Microsoft/Yahoo! Search Business — Case M.5727

This transaction provides another useful digital example.

The Commission expressly considered whether Microsoft's activities outside search—such as PC operating systems and productivity applications—could provide it with an ability to leverage market power when negotiating distribution arrangements for search technology, including through bundling.

After investigation, however, the Commission concluded that significant competitive harm from the identified conglomerate concern was unlikely.

This decision demonstrates an important principle:

Potential technological leverage is not enough by itself.

Authorities examine whether the firm would actually possess the ability and incentive to pursue foreclosure and whether the strategy would significantly damage competition.

8. Google/Motorola Mobility — Case M.6381

Google's acquisition of Motorola Mobility also raised ecosystem questions.

Google already controlled Android, while Motorola produced mobile devices and owned important patents.

The Commission therefore examined vertical relationships involving Android and standard-essential patents, as well as conglomerate relationships between smart mobile devices, intellectual-property rights and Google's mobile online services.

The case illustrates how ownership of several complementary technological assets can require competition authorities to examine the entire ecosystem rather than only direct horizontal overlaps.

7. Legal Test for Algorithmic Conglomerate Foreclosure

A useful analytical structure is:

Market Power → Ability → Incentive → Foreclosure Mechanism → Competitive Effects → Efficiencies/Justification

Ability

Authorities ask whether the undertaking actually possesses the technological or commercial ability to leverage its position.

Relevant factors can include control over:

• operating systems;
• important datasets;
• APIs;
• app stores;
• ranking algorithms;
• default settings;
• distribution channels; and
• network infrastructure.

Incentive

Having the ability to foreclose does not necessarily mean that doing so would be commercially rational.

Authorities therefore examine whether benefits from expanding power into another market could outweigh losses caused by restricting interoperability or access.

Foreclosure

Potential strategies can include:

Tying + Bundling + Self-preferencing + API restrictions + interoperability degradation + discriminatory access + default positioning.

Competitive Effect

Finally, the authority considers whether the strategy is capable of materially weakening effective competition rather than merely disadvantaging individual competitors.

The established conglomerate-merger framework similarly emphasizes ability, incentive and significant detrimental effects on competition.

8. Why Algorithms Make Conglomerate Power Different

Algorithms can make ecosystem power particularly important because decisions occur continuously and at enormous scale.

A traditional business might negotiate distribution manually. A digital platform can automatically determine millions of:

rankings, recommendations, advertisements, prices, defaults and access decisions.

Algorithms can also create feedback loops:

Market power → more users → more data → stronger algorithm → better targeting/personalisation → more users → stronger market position

Network effects can reinforce this process. EU competition doctrine expressly recognizes direct and indirect network effects as potentially important in digital markets.

9. Consumer Harm

Consumer harm need not be limited to higher prices.

In digital markets many services have a monetary price of zero. Competition may instead occur through:

• quality;
• innovation;
• privacy;
• functionality;
• interoperability;
• consumer choice; and
• product variety.

Accordingly, exclusion of innovative competitors can matter even where consumers continue receiving a service without paying a monetary price.

Current EU competition guidance treats quality broadly, including matters such as functionality, integration, security, privacy protection and availability.

10. Efficiencies and Legitimate Integration

Conglomerate integration is not inherently harmful.

Combining algorithms and complementary services can produce substantial benefits:

better interoperability + improved recommendations + lower transaction costs + greater convenience + improved security + innovative products.

Competition analysis therefore has to distinguish efficient ecosystem integration from exclusionary leveraging.

For example, EU jurisprudence recognizes that product integration can generate lower costs, convenience and quality improvements. Such considerations can be relevant when examining objective justification and efficiencies.

Conclusion

Algorithmic conglomerate market power sits at the intersection of traditional conglomerate theory and modern digital-platform economics. The central problem is not simply that a company owns many complementary services. Competition concerns arise where control over algorithms, data, operating systems, distribution channels or technological interfaces gives the undertaking the ability and incentive to transfer market power across markets and thereby weaken effective competition.

Cases such as Microsoft v Commission, Google Android, Google Shopping, Google/Fitbit, Tetra Laval/Sidel, GE/Honeywell, Microsoft/Yahoo and Google/Motorola Mobility demonstrate different parts of this framework.

The key competition-law question can therefore be expressed as:

Does integration create a better ecosystem through competition on the merits, or does control of one part of the ecosystem provide a mechanism for foreclosing competition elsewhere?

Modern competition analysis answers that question by examining market power, data advantages, network effects, interoperability, algorithmic ranking, tying and bundling, ability and incentive to foreclose, actual or likely competitive effects, and legitimate efficiencies.