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OpEdNews Op Eds    H3'ed 5/15/19

Facebook Isn't a "Monopoly" -- Let's Not Make it Into One

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Facebook co-founder Chris Hughes, adding his voice to calls to "break up" the social media giant, calls it a "powerful monopoly, eclipsing all of its rivals and erasing competition." In recent years, we've seen similar claims, and heard demands for similar remedies, aimed at Google, Amazon, and other large companies.

Are these claims true? Are the large "dot-coms" monopolies in any real sense? The short answer is no. Using the "m-word" is a way of avoiding the necessity of making a sound argument for a desired policy outcome.

Whether that avoidance strategy is due to laziness, or to not having a sound argument to make, or some other reason, falls outside the scope of a short op-ed column. But the first step in forcing better arguments is quashing bad ones, so let's look at what "monopoly" actually means.

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According to Oxford Living Dictionaries a "monopoly," as the term is used by the Facebook-breaker-uppers, is "[a] company or group having exclusive control over a commodity or service."

What commodity or service is Facebook a "monopoly" in?

Certainly not social media. You've probably heard of Twitter. You may have also heard of Diaspora, Minds, MeWe, Mastodon, Gab, and a number of other companies, sites, and apps offering the ability to post updates to friends and followers and discuss those updates.

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Advertising? Not even close. Does the name Google ring any bells? How about Microsoft? There are plenty of smaller web advertising networks you probably haven't heard of as well.

Then there's messaging and chat. Yes, Facebook owns Messenger and WhatsApp. But it doesn't own Discord or Slack or Signal or Skype or Telegram or any of hundreds of other messaging/chat apps.

Facebook has lots of users. Facebook makes lots of money. But Facebook isn't a "monopoly" in any of the services it offers. It has loads of competitors, many of them doing quite well, and its users and customers have the option of using those competitors instead of, or in addition to, Facebook any time they like.

More importantly, Facebook has no ability to prevent new competitors from entering the markets it serves. And therein lies a political paradox.

While so far resisting the "breakup" talk, Facebook and its CEO, Mark Zuckerberg, have recently become increasingly receptive to government regulation.

Why? Because Facebook is big enough and rich enough to cheerfully comply with whatever regulations its detractors can come up with, and to hire armies of lobbyists to "capture" and shape that regulation. It can probably even survive and profit from a supposed "breaking up."

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Your brother-in-law's basement social media or advertising or messaging start-up, on the other hand, probably isn't well-financed enough to navigate a substantial federal regulatory regime or to successfully fight for its life if the regulators come down on its head even once.

Facebook isn't a monopoly.

Facebook isn't close to becoming a monopoly.

But if the people incorrectly calling it a monopoly get their way, they'll have taken the first giant step toward making it into one.

 

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Thomas L. Knapp is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism (thegarrisoncenter.org). He lives and works in north central Florida.


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4 people are discussing this page, with 4 comments  Post Comment


Devil's Advocate

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Facebook isn't, technically, a monopoly. But it has achieved enough size, wealth and power in the internet landscape to unfairly interfere with that landscape in so many ways.

It may not be a monopoly, but it is obviously attempting to BECOME a monopoly. Now that Facebook seems to have its own seat in congress, it is engaging in behaviour designed to eliminate any significant competition. If they're not buying a promising startup company, they're working with government to have a regulation regime that only Facebook could survive in.

Luckily, a movement toward decentralized and encrypted services has begun. More people are jumping the Facebook ship in favour of these new services, which can't be commandeered the way Facebook has.

Facebook will not succeed in becoming a monopoly.

Submitted on Wednesday, May 15, 2019 at 5:32:49 PM

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The antitrust laws do not use the dictionary definition of "monopoly". It is just shorthand for "restraint of trade". Here is how the FTC defines "monopoly", it is quite a few pages.

The question is would breaking up a corporation (or preventing mergers) increase competition: could Messenger, WhatsApp, Instagram become competition to Facebook, if they were separate companies?

Unfortunately, for the past 40 + years, the FTC has not enforced antitrust laws. It has also permitted vertical and well as horizontal integration.

The argument for allowing mergers has been that corporations need to be big to compete with other transnational corporations in global markets. Now we have a handful of domestic banks, media corporations, pharmaceutical companies, etc. that , while technically are not "monopolies", they dominate the market.

I don't know the specifics of Facebook, but what bothers me is that "big is bad", in general, for the very reasons you mention: big corporations have too much political power, especially since they are ridiculously consider people.

The big danger of big corporations is that they work hand in glove with the government to limit our freedoms. It has led to what Chris Hedges refers to as inverted totalitarianism.

Submitted on Wednesday, May 15, 2019 at 6:04:22 PM

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Thomas Knapp

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I would classify this column as a specific category of piece I occasionally write: The "before we get to the real issues, we have to define our terms" piece.


Facebook is not a "monopoly" even under the FTC's definition (the "leading position must be sustainable over time: if competitive forces or the entry of new firms could discipline the conduct of the leading firm, courts are unlikely to find that the firm has lasting market power").


Facebook isn't even in the "leading position" in all of its market areas.


It's in second place on advertising, behind Google. Amazon is entering that market. Microsoft and Verizon, and a bunch of smaller brokers are already in it.


Its two messaging apps have about 50% market share among the top 8 according to Statistia, but that list doesn't include Discord, Slack, or Signal for some reason. It's in the leading position, but it has competitors.


As of July 2018, Facebook's market share of social media visits had dropped from a high of nearly 70% to 36.64%. Twitter, Reddit, and other competitors continue to eat away at its dominance.


I'm all for exploring the issues relating to Facebook's size, market power, etc. But if we start that exploration from the position that it's a monopoly, we're starting from a false position. It's like trying to get to Montreal from Toronto, but pretending you're in Nome. You're not going to go in the right direction if you do that.

Submitted on Wednesday, May 15, 2019 at 6:31:44 PM

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Lee Beacham

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Apropos title to the article. Facebook is a fad like Monopoly was in the 60's (my youth). Facebook will fade. At least it's not a Right yet, or we have to buy ever poor person a phone and a interment connection......................What?!! We already do have to do that? We're screwed. Things like this will increase the debt beyond what we can service...................What?! The debt is already unsustainable and we can't pay it back? At least I'm old and on Social Security. It will never fail because we doubled the tax in the 80's to make sure the Boomers wouldn't overwhelm the system............What?! the Government spent that too? We're screwed.

Submitted on Wednesday, May 15, 2019 at 8:34:10 PM

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