Digital economy is mainly characterized by innovative competition, but the monopolization trend in this field in recent years has triggered people's concern about the abuse of market power by platform enterprises to the detriment of innovation. In the first revision of China's Antimonopoly Law, “encouraging innovation” has been added to the purpose of the legislation to respond to the regulatory requirement. As the concentration of undertakings in the digital economy is highly related to both antimonopoly and innovation, this paper aims to study how to achieve an overall balance between promoting innovation of platform enterprises and maintaining the vitality of innovation in the market through the reasonable construction for the rule of concentration of undertakings.
Based on the economic theories of Schumpeter, Arrow, and other economists on the relationship between innovation and competition, this paper analyzes characteristics of market structure and competition of the modern digital economy, and proposes that in the field of the digital economy, platforms maintain a “moderately competitive” market pattern, which makes it necessary to compete through innovation, and the platform's concentration of undertakings on startups enables platforms to obtain the innovation needed for competition, while startups can survive and develop with the resources of platforms. Reviewing domestic and international practice cases, this paper summarizes the two-fold effects of concentration of undertakings in the digital economy on innovation: on one hand, the concentration of undertakings can enhance efficiency and capacity of innovation through resource integration of key assets of startups and organizational restructuring, which promotes sustained and rich development of innovation; on the other hand, through “killer acquisitions” or imposing technological blockades after concentration, the concentration of undertakings can restrict or exclude potential innovation, weakens other competitors' ability and willingness to innovate, and thus curb the sources of innovation in the market.
When the global digital economy and resources are in fierce competition, to support China's platform enterprises to carry out technological innovation and enhance key technological innovation capabilities, this paper proposes that a more inclusive attitude shall be adopted towards platform enterprises' investment in favor of innovation; the “endogenous mode of competition” of innovation shall be clarified in the legislative framework of the current Antimonopoly Law; and the following specific suggestions should be proposed to improve the current rule of concentration of undertakings. First, in the design of the declaration threshold rule, the prior negotiation system can be improved in a non-compulsory manner, and the simplified procedure can be applied to the concentration where unique and significant “technological innovation” can be realized. Second, in the design of the concentration review rule, we can explore the establishment of a preliminary standard of review to identify the anti-competitive effects, and emphasize the burden of proof on the participants of concentration to prove that the concentration can produce favorable effects including promoting innovations. Third, for the application of the remedial measures, a flexible remedy enforcement mechanism shall be established, where additional behavioral restrictions shall be adopted mainly, the monitoring mechanism shall be improved, and participants of concentration shall be allowed to apply for early expiration or adjustment of the additional conditions in accordance with changes in the market environment. The digital economy is still in a stage of rapid development, and adhering to the principle of prudent supervision in monopoly practice aligns with China's strategic development requirement.