Disruptive innovation is relevant for antitrust policy, yet it has received scant attention in the literature and in the decision practice. Building on previous work, this paper seeks to provide an expanded analysis of how disruptive innovation can be integrated more systematically into antitrust law and policy. We believe that disruptive innovation poses the greatest challenge to antitrust analysis, since it is that type of innovation that is most different from routine static market phenomena. As will be further explained below, disruptive innovation perfectly encapsulates and pushes to their outer bounds the elements that characterize innovation in general: unpredictability, uncertainty, dynamic effects and significant, sometimes brutal, impact. It is perhaps also the most sophisticated innovation theory found in the literature, since it brings together technology, economics, business and sociology and it is built on a paradox, as will be seen below. Hence, if disruptive innovation can be factored in antitrust analysis, then antitrust analysis overall will have made significant progress in dealing with dynamic effects and innovation in general.
As a starting point, Part 1 reviews how business literature defines disruptive innovation and its implications for business strategy. Part 2 then examines how, in general, disruptive innovation could fit within antitrust analysis, as competition on the market as opposed to competition for the market. Part 3 examines the implications of disruptive innovation for antitrust metrics and theories of harm. Finally, Part 4 brings together our conclusions from the foregoing review.
