Boundedly rational users and the fable of break-ups: Why breaking-up big tech companies probably will not promote competition from behavioural economics perspective

The aim of this short article is to show why breaking-up big tech companies, probably will not promote competition from ‘behavioural economics’ standpoint. In particular, this article shows that ‘bounded rationality’ theory casts heavy doubt on the ability of breaking-up large tech companies to effectively promote competition in digital markets. As recent behavioural evidence shows, users tend to use only one single platform, instead of using multiple platforms in such way that will promote competition between these platforms. It also shows that users do not always choose the best quality platforms available to them among others. In light of this evidence, it is not likely that competition will emerge in digital markets after the breakup, as it is expected that users, which can be regarded as ‘boundedly rational users’, will probably still behave in such a manner that deviates from strict patterns of rationality, and continue to use only one single platform. As a result, and after the breakup, digital markets will continue to be dominated by a single platform. Hence, this article concludes that the notion of breaking-up big tech companies should be abandoned entirely, and other solutions for curbing big tech companies’ economic power should be sought instead.