EU urged to toughen merger rules to rein in Big Tech
BRUSSELS, BELGIUM — A coalition of global civil society organizations is demanding a major overhaul of the European Union’s merger guidelines, arguing that underenforcement has allowed Big Tech to amass excessive market power.
Digital Merger Watch (DMW), a network of 17 groups, contends that current rules are ill-equipped for the digital age, leading to rampant market concentration and stifled innovation.
Underenforcement fuels digital market concentration
Over the last 20 years, 2.39% of the 7,354 notified mergers proceeded to an in-depth Phase II investigation, and a mere 0.2%—just 15 deals—were ultimately blocked. This means the European Commission approves nearly 99.9% of all notified mergers, a track record DMW states disproves any notion of overenforcement.
This leniency coincides with troubling economic trends, including increased industry concentration, rising markups, and declining business dynamism across the EU.
One of the failures that was highlighted is the unchecked takeover of startups by tech giants; in a period between 2019 and 2025, at least 191 companies have been acquired by Alphabet, Amazon, Apple, Meta, and Microsoft, but only eight of their mergers were investigated by the Commission before going to Phase II investigation. Only one merger, the acquisition of iRobot by Amazon, was reported.
Calls for updated metrics and tougher safeguards
The submission argues that the current guidelines rely on outdated tools and narrow theories of harm, failing to capture the realities of digital ecosystems.
A primary criticism is the overreliance on the Herfindahl-Hirschman Index (HHI) for measuring competition, a metric that DMW says underweights smaller firms and ignores product differentiation and market dynamism. The group advocates for broader indicators like markups, diversity, choice, and pluralism to assess competitive health better.
Moreover, DMW also demands the implementation of so-called ecosystem theories of harm to comprehend how tech giants use the interrelated products and services in markets to expand their influence.
The guidelines should also depart from the price focus and instead focus on non-price elements of competition like innovation, quality, privacy, and consumer choice, which are usually the most important competitive elements in digital markets.
Why this matters for outsourcing and BPO providers
The demand to increase merger scrutiny may have profound effects on the business process outsourcing (BPO) sector, where the presence of a large number of technology vendors and service providers usually establishes a competitive environment.
When the suggested guidelines are effective in their attempts to stop further concentration of the market, the BPO industry can enjoy a more diversified and innovative ecosystem of smaller software and platform vendors, which can result in improved services and superior pricing.
On the other hand, under the conditions of uncontrolled consolidation of big tech conglomerates, BPOs may experience the threats of more vendor lock-in, less bargaining power, and reliance on a small number of dominant platforms that might increase the cost of doing business and reduce their flexibility.
There is a risk that focusing on assessing the impacts of mergers on labor markets could lead to increased scrutiny of acquisitions in the outsourcing sector, which may not necessarily cause destructive wage suppression or decreased worker welfare.
However, if implemented correctly, this would fundamentally reshape the competitive landscape for the BPO and outsourcing industry, pushing toward a more diverse, innovative, and cost-effective vendor marketplace that empowers providers rather than constrains them.
