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Is Facebook a Monopoly?


Facebook Cold Storage Centre (c) Facebook


Statista's Global Consumer Survey results dropped into my inbox last night. In the intro, Statista leaves a brief comment on these in light of the FTC's decision rejecting the US Department of Justice's contention that Facebook is a monopoly and should be broken up.


Bloomberg and many others are covering the FTC angle in more journalistic terms. I want to comment on Facebook with a slightly different angle.



Statista's survey shows that 73% of the users surveyed use Facebook regularly. Let's think about what this means in light of the FTC case.


First of all, what is a monopoly? According to Investopedia:


A monopoly refers to when a company and its product offerings dominate a sector or industry. The term monopoly is often used to describe an entity that has total or near-total control of a market.


Monopolies can result from extreme free-market capitalism, in that absent any restriction or restraints, a single company or group becomes large enough to own all or nearly all of the market (including by acquiring competitors) for a particular type of product or service.


On the other hand, monopolies can also arise and be sustained by government-enforced barriers to entry or regulations that limit competition (e.g., in the case of utilities).


Now, let's look at this definition more closely. Does Facebook have total or near-total control of a market? If we take Facebook, Messenger, and Instagram in terms of "regular use", then three of the top four properties listed on the Statista chart belong to Facebook.


Does that imply Facebook as control of the social media market? That's a stretch. There are plenty of alternatives. And for most of us Facebook users, the platform is simply an aggregation of largely toxic users that we spend most of our time blocking or shaking our heads at. I've recently reduced my "friends" from over 2,000 down to 750, and am making further reductions every day.


Facebook isn't about "left" and "right". Facebook is about restricting access to a small group of friends, relatives and known acquaintances whom you respect, and whom you are genuinely interested in hearing from, and even learning from. If you are using Facebook as a political echo chamber, or a venue to spew your ideology, that's your own issue, and it's both protected and regulated by free speech laws and practise, as well as by Facebook itself.


Does Facebook have a monopoly on texting? No. Ironically, I use Messenger and WhatsApp for the majority of my texting communications (which are increasingly about business, not social). But I can equally use Viber, SMS, and any of other platforms should I choose to.


Does Facebook have a monopoly on advertising? No, definitely not. Again according to Statista, global digital advertising spend was $ 455 billion in 2020, while Google's advertising revenue in the same year was about $ 147 billion. This doesn't include other forms of advertising. Facebook's advertising revenue in 2020 was $ 84 billion, according to Statista.


Does Facebook have a monopoly on some areas of speech, like political speech? No. The Cambridge Analytica "scandal" notwithstanding, Facebook's advertising tools are open to any user. They can be used (or misused) by anyone. There are further restrictions on political users. But, when a politician gets on TV and blatantly lies about something, there are certainly no penalties for the TV station.


Finally, let's look at the Statista numbers. The numbers show "regular use" of social media by US consumers aged 18 to 64, with a total of 5,047 online consumers polled. These numbers are really meaningless. It does not differentiate:


a. Consumer with a Facebook property but no other properties;

b. Daily / weekly / monthly users;

c. User who pay versus not pay;

d. Business versus personal users.


The US Department of Justice, therefore, is going to have a difficult time proving that Facebook is a monopoly, at least under current definitions. After all, social media is a largely voluntary activity that consists of free-to-use platforms.


The decision to use them is not linked to a vital or mandatory economic activity, such as energy generation and consumption. And there are almost no barriers to access.


There are definitely areas that I dislike when it comes to Facebook:

  1. I believe that it has reached a size where, by actively buying out smaller competitors, it is having a stifling effect on innovation. This same argument can be made about many of its Big Tech competitors.

  2. I believe that over the long term, it is having a deleterious effect on how society thinks, evaluates and interacts. But the same argument can be made for any mass media channel, especially television, which is subject to even more overt political control and has probably done more to "dumb down" society than anything else in existence.

  3. I believe that as a democracy, we have still not understood how to regulate Big Tech. But on the other hand, it seems we can barely hold elections properly, let alone address the fact of "dark money" and political contributions funding special interests.


The problem is: none of these dislikes is caused by an offence against existing law. And none of these dislikes is exclusive to Facebook: they are a feature of our modern society.


The fact is that Facebook is almost a perfect mirror. It reflects all the negative and positive traits of the users who occupy it. Although for some, the narcissism, arrogance, vanity and pride are more evident, for others one can see concern, affection, intelligence, generosity and a peculiar kind of self-validation.


It is a magnifying board when someone chooses to advertise on it. It is a source of stress relief and also an anxiety generator, as shown in study after study.


It is, therefore, an almost perfect human creation.


One mistake we are making is trying to over-regulate or "normalise" human nature. Our laws and social organisation barely work at this level. It is unreasonable to believe they will work on Facebook.


Cheers,


Philip Ammerman








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