The Interfolio Acquisition Highly Concentrates the Nascent Market for Faculty Information Systems

Interfolio is the leader in a rapidly emerging category of products known as Faculty Information Systems (FIS), which “[track] all aspects of faculty data enabling the institution to maintain a single source of truth about faculty members. FIS details [faculty] credentials, careers, teaching and research.”¹ As the market analysis firm Gartner noted in 2021, “Point solutions for individual FIS components, such as faculty hiring, have existed for some time. However, the concept of a comprehensive system, built from a set of integrated modules from a single vendor or partnered vendors, is gaining traction.”²

The market for these products is nascent and still in the process of becoming fully formed. Accordingly, market share data in this space is in the early stages of becoming available. One source cited by Gartner, LISTedTECH, provides the following market shares for FIS vendors:³ Interfolio (24%), Activity Insight (Watermark) (18%), Elsevier (18%), SEDONA (13%), “homegrown” systems⁴ (9%), Elements (4%), Publons (4%), Eprints (3%), and Esploro (1%) with a handful of products with <1% market share.

The variety of firms included by this source highlights the immaturity of the market, with different firms operating from different points of strength, and a more limited number of firms offering a more comprehensive product that spans the spectrum of functionality across “credentials, careers, teaching, and research,” as described by Gartner. From this perspective, Interfolio’s market position is likely even stronger than this market share data would indicate as its FIS is one of the most complete, fully-featured products in the market.

The acquisition dramatically increases the concentration of the FIS market, putting it on the brink of a key regulatory threshold. According to LISTedTECH, Elsevier and Interfolio’s overall market share is now 43%, which is more than the next five commercial competitors combined. Using the Herfindahl-Hirschman Index (HHI), a common measure of market consolidation utilized by regulators,⁵ the acquisition pushes the FIS market from an HHI of 1,435 to 2,384—less than 5% shy of the 2,500 point threshold described by the Horizontal Merger Guidelines for a market to be considered highly concentrated.⁶

While this may not have been enough to prompt antitrust enforcers to stop the acquisition, it is a clear illustration of the potential harms to competition, particularly as Elsevier and Interfolio’s combined market share is likely to grow. Reflecting on this consolidation, LISTedTECH refers to Elsevier’s purchase of Interfolio as an “an acquisition that reinforces the oligopoly.”⁷

Herfindahl-Hirschman Index (HHI) for the Nascent FIS Market^8,9,10

Furthermore, 2021 data on the adoption rates of new FIS platforms indicate that Interfolio and Elsevier are capturing an outsized proportion of this market as it is emerging—combining for 70% of new adoptions over the past 5 years, with the next closest competitor (Watermark) only capturing 13%, according to LISTedTECH.¹¹

It is important to note that the number of institutions using their own “homegrown” systems represent a potential source of market growth for more mature and/or better funded companies, rather than indicating a low barrier to entry in this market. As LISTedTech notes, these homegrown systems range from “modified content management systems to excel spreadsheets”¹² and appear to be what institutions are moving away from—and not the future of the market.

Based on this trend data and the strength of Interfolio’s offerings, it is reasonable to expect that Elsevier will gain further market share post-acquisition. This would push the market’s HHI well-past the 2,500 point threshold for high market concentration, even before accounting for the ways Elsevier could leverage its other product lines to strengthen its position in the FIS market (for example, through bundling FIS products with journal subscription packages).