Is big business really getting too big?

at the Federal Trade Commission have been going after large deals merely because they are large—or that is how it feels. Courtroom defeats do not dampen the agency’s zeal. The latest came on July 11th, when a judge rejected its request to block Microsoft’s $69bn acquisition of Activision Blizzard, a developer of video games. The’s competition authorities are making noises about breaking up Google.

At the same time, incumbent firms look more entrenched. In Britain, the average number of firms that stick in the top ten of their industries by market share three years later was five before the financial crisis. It is now closer to eight. Thomas Philippon of New York University’s Stern School of Business finds a similar reduction in churn among top American firms.has come up with a crude estimate of “excess” profits for the world’s 3,000 largest listed companies by market value .

That concentration has also risen in Europe, where competition authorities have not been as sleepy as in America, likewise suggests that powerful structural forces are at play. John Van Reenen of the London School of Economics points to technology and globalisation. The internet has reduced the cost of shopping around, even as software and other technology allow the best firms to scale up their operations around the world.

Most heartening, far from being subdued, dynamism may be on the rise. John Haltiwanger of the University of Maryland notes that business formation, which had been “quite anaemic” since the mid-2010s, has surged since the pandemic . In the past few years many more new firms have been created than old ones have been shut down. Whether these startups will dislodge incumbents is still unclear. But venture-capital investment suggests investors see scope for healthy returns.

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