R you being foreclosed?

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We draw parallels between the pandemic and foreclosure concerns in network industries by applying the “Susceptible, Infected, Recovering” (SIR) modelling approach to an antitrust setting. We consider an app or other digital service seeking to grow into an addressable market where consumers already use an incumbent platform. We assume the entrant can grow organically, but amassing more users allows it to spread more effectively, with current users sending invites to friends or generating content increasing its attractiveness. We then consider the impact of the incumbent taking steps that make the entrant “less infectious”. This reveals three main implications for antitrust policy: first conduct may have large effects even if the targeted service continues to grow in absolute terms; second conduct is particularly effective when applied against nascent services before they benefit from network effects to reach the “steep part of the S-curve”; third, conduct can have highly non-linear effects, with the most “viral” services continuing to grow while others are eliminated. In each case, there are parallels with the experience of the pandemic and implications for long-run innovation incentives.