
Facebook’s dominance is built on anti-competitive behavior - hhs
https://insights.som.yale.edu/insights/facebook-s-dominance-is-built-on-anti-competitive-behavior
======
nabla9
Thomas Philippon (NYU professor) has nice new book "The Great Reversal: How
America Gave Up on Free Markets"
[https://www.hup.harvard.edu/catalog.php?isbn=9780674237544](https://www.hup.harvard.edu/catalog.php?isbn=9780674237544)

Here is an interview with Philippon that has some of the main points:
[https://promarket.org/2019/12/09/the-lack-of-competition-
has...](https://promarket.org/2019/12/09/the-lack-of-competition-has-deprived-
american-workers-of-1-25-trillion-of-income/)

------
oska
I think the very unhealthy dominance of Facebook will only start to properly
recede when countries outside the USA start to block its use. This is a highly
predatory company that takes away sovereignty in each nation's cyberspace and
it really only makes sense for foreign countries to block it and either let
their own national corporate replacements emerge (as China has done) _or_
foster the use of open social networks and protocols (my strong preference).

This doesn't solve the problem for people in the USA of course (well, other
nations fostering open social networks will help some). The USA obviously
needs to look at antitrust measures to fix the issue at home. But other
countries can't afford to wait for that to happen.

~~~
netcan
Small countries can ban facebook from doing certain things. Ultimately, some
sovereignty exists even in global commerce. If New Zealand made (eg) political
advertising, targeted advertising, or such ilegal, Facebook would stop doing
it in New Zealand.

That is treating the symptom, but it is not totally ineffective.

Treating the problem is dealing with the monopoly. The current state of
antitrust laws, norms and regulatory pressure is entirely useless. It's
entirely based around regulating 19th century monopolies, and tempered by 20th
century failings.

Facebook, Amazon, & Google are not Bell. With the old infrastructure
monopolies, regulators needed to break up the monopoly without losing the
services & capital investments. They needed post-antitrust companies to still
be viable.

Facebook doesn't have that problem. Facebook could disappear tomorrow and
consumers would barely be inconvenienced. Social media is not in short supply
and doesn't require much capital. Facebook didn't need to sink much capital
into building it. Their competitors will not need much capital to replace it.
All they need is for Facebook to move out of the way.

Antitrust action, at least in facebook's case, doesn't need to be precise. It
just needs to be strong.

~~~
justaguyhere
Maybe future generations will realize how shitty FB is and stop using it (one
can hope!)

A bigger problem is FB owns much better products like WhatsApp - it is easy to
quit FB than WhatsApp in my opinion

~~~
scarface74
So you mean the solution to the FB “problem” is people using their own free
will and it doesn’t involve the Nanny State?

~~~
netcan
Nanny-state/libertarian arguments against antitrust are misguided.

I am against a nanny state. Deeply against it. It gets abused of power. is
invariably useless and freedom is important for its own sake.

Monopolies extend these problems into the commercial realm. Nanny companies
instead of Nanny State. Facebook is _worse_ than most state media monopolies.

It's like living in a company town and complaining about the nanny state. Just
let the company rule us in peace.

~~~
scarface74
Facebook doesn’t have coercive power to force me to do anything. The
government does.

It’s not Libertarianism. It’s a fundamental distrust of governments.

~~~
netcan
That's what I mean. Your distrust should extend to things that have the same
qualities as "government." At the more monopolistic end of the spectrum, and
in many real life examples, they're a type of government... in the sense that
they govern. This can also be true of very powerful religious institutions.

Power, coercive or otherwise, is more complex than that.

If all media is state media, that's something to seriously distrust. If all
media is FB, the church of england church... same problems. Whether or not
media is "coercive" is uninteresting semantics.

Whether it's big tech or ccp "soft power" is a technicality. Abusable power is
abusable power, and being nannied is a symptom.

Sure, you can still kinda hide from Facebook. Takes a little effort, but
whatever. You can also get around the great firewall, if you really want to. A
lot of chinese people do, some of the time. Most of the time though, most
people read the state approved internet. Most of the time, most people are
within the influence of the FB machine... and it's still gaining power.

~~~
scarface74
Can Facebook have me arrested? Take my property via “civil forfeiture” or
“imminent domain”? Can they force me to pay taxes? Do they employ police who
can shoot me in the back to make me use their services? Can they hire people
to choke me for nine minutes? Do their employees have military styled weapons
who can be summoned to someone’s house just by making a false report?

Comparing any modern private company’s power to the government is like
comparing a flea to the sun.

~~~
netcan
The only remedy to this is a history lesson. Do you know that the British
Empire, and many of your colonies started as chartered monopolies? Not just
history either.

Anyway, what do those things have to do with the nanny state? Treating
"government" as a monolith is like treating "capitalism" as a monolith.

Comparing a police force to a media organisation is a bad comparison. You made
it, not me.

~~~
scarface74
You mean like the government that wants to outlaw end to end encryption, run
by President who threaten to “shut down Twitter” because he said something
they don’t like.

------
ankit219
Antitrust laws were always based on supply side monopolies, while this is a
demand side monopoly, and would be a tricky case for anti trust to prove.

If the mandate is to do what is best for customers, then the best solution I
can think of is to let FB function as one entity but toughen the norms on data
collection. The other thing is Facebook should not inhibit any other social
network trying to grow using FB's graph. A good example is how Instagram grew
with the import of Twitter social graph, and when it came to Facebook, it grew
further because it could import the connections that Facebook already had
access to. In the name of privacy, it is a good idea to block that, but that
essentially inhibits any other social network growing and becoming big. If
such an export is available and allowed (while satisfying the privacy
concerns), this could enable competition in the social space. As a gatekeeper,
Facebook has every intention not to allow any usage to the graph.

The idea about breaking up of social networks would not do any good. You would
eventually have to solve multiple problems (and again and again) as the broken
up entities either die or become dominant in a big enough niche. Even if you
break up Instagram or Whatsapp from Facebook, they are still monopolies in
their domains. Insta might not be able to survive since they used the
Facebook's ad delivery intelligence, while Whatsapp would be a dominant
monopoly in messaging nonetheless.

This is a landmark case if brought on, but needs to be dealt very smartly, if
they want to actually solve problems and set the right precedents.

~~~
nabla9
>Antitrust laws were always based on supply side monopolies

I don't think this is true. The idea that antitrust is only about supply and
consumer benefit is extremely limited view. It came in flavor in the US
late-1970's and it's known as "Chicago School of Antitrust Law". The defining
book of that school is Robert Bork's 'The Antitrust Paradox' (1978).

~~~
Nasrudith
I wonder were there any historical precidents of antitrust actions taken
specifically when there wasn't control over suppply either horizontally or
vertically resulting in the end of the chain being unable to compete.

Not taking this as evidence of "it never existed" but genuinely wondering if
there was ever an obscure bit of precedence by "pure quality".

Microsoft's privileging of Internet explorer and its were a closer example of
just anti-competitive but they also had the overwhelming computer market share
sold.

I don't recall of any cases where so much as a patent was revoked just because
it lead to far more market dominance than expected from the limited time. Even
when it utterly devestated entire industries like what cloth mills did to the
literal cottage industry weavers.

~~~
nabla9
I don't think where this is coming from, but you seem to imply that there is
case now with FB.

------
machinehermit
Facebook obviously posses some interesting questions on various topics but
framing the debate as Facebook collecting "monopoly rents" is ridiculous.

I haven't used Facebook since 2010 and I have never used Instagram.

If someone in my social network wants to send me some information they have my
number and they can txt me. If someone wants to send me a picture they can do
the same.

I don't use Facebook because ultimately for me it is completely redundant.

To call Facebook a monopoly is an analogy at best. You are not going to solve
these problems through analogy though, these are uniquely new problems.

~~~
beagle3
You are not the customer. Advertisers are.

Google and Facebook are the only games in town for online advertising these
days; the fact both are making incredible amounts of money means either
competitors aren't good enough, or are being priced out of the market, or
squeezed out of it (due to network effects or anti-competitively).

For Google - the vast majority of whose income comes from search ads - there
is no network effect. They are mostly much better (I try Bing every now and
then, it's not even close; I set up ddg as my main search, but have to reach
for google for about 1/3 of searches). However, they also employ tactics one
could consider anticompetitive, e.g. paying Apple billions/year to be the
default search engine on iPhones. YouTube does have a network-effect lock in,
but AFAIK that's not really a revenue source for google. It does complete the
advertising offering and keep newcomers out, though.

For Facebook - they are hardly doing anything better than competitors; it's
all about the network effect. And they've been VERY busy making sure that
every network which is big enough (or even growing quickly enough) to have its
own network effect is either theirs (instagram, whatsapp) or sidelined
(snapchat).

IIRC They paid $60M for Onavo - providing discounted bandwidth "safely
encrypted" from the prying eyes of user's ISP but _totally_ visible to
Facebook, which gave them a real-time sample of application and website use --
which gave them the insight needed to purchase rising stars Instagram and
reigning king WhatsApp (and attack Snapchat after they refused a buyout
offer).

You are not Facebook's customer. You are a user, Facebook's product, sold to
Facebook's customers, the advertisers.

Facebook and Google have a duopoly on online advertising (which, especially
now with lockdown, but even independently, is nowadays much of advertising).
There are unique new problems with these new models, but Facebook is
definitely one part of a duopoly, and likely a monopoly by any existing legal
definition.

~~~
bhahn
> YouTube does have a network-effect lock in, but AFAIK that's not really a
> revenue source for google.

Just to clarify, YouTube revenue in 2019 was around $15 billion, which even
for Google is not a small number.

~~~
beagle3
Thanks for the correction. I meant “profit”, and wasn’t even aware that
YouTube revenue was disclosed this year for the first time (profit wasn’t...
and YouTube likely costs a lot more to run per $ earned than the search, but
how you assign profits and costs is art rather than science).

------
alexmingoia
The only practice listed in the paper that could be construed as anti-
competitive is acquiring other “social networks.” However, it’s a stretch to
consider every website that a user can use a competitor to Facebook. It’s not
like Facebook acquired a MySpace or anything.

But why are acquisitions anti-competitive? Nothing forces the competitor to
sell. Acquisitions prove people can compete.

It’s a contradiction to say the network effect protects Facebook but at the
same time say they had to buy Instagram because they were successfully
competing despite the network effect. Facebook’s network effect didn’t stop
Instagram, Snapchat, WhatsApp, etc.

~~~
boomboomsubban
The paper lists five different things as anticompetitive, why do you disagree
with their assessment? Allowing Vine to use your API and then blocking it
after Twitter acquired it seems anticompetitive.

~~~
alexmingoia
Because none of the things besides acquisition is anti-competitive in the
context of anti-trust law.

Facebook doesn’t owe competitors their data. It’s _absurd_ to construe not
actively helping competitors by giving them your data as “anti-competitive.”

~~~
boomboomsubban
>Because none of the things besides acquisition is anti-competitive in the
context of anti-trust law.

Have you read antitrust law? The Sherman Act is vague enough that anything
that could be considered anticompetitive would violate the law. The "Rule of
Reason."

> It’s absurd to construe not actively helping competitors by giving them your
> data as “anti-competitive.”

Publicly agreeing to an agreement allowing something and then changing the
terms to control how competitive they can be is.

------
cs702
The actual paper is available for free download here:
[https://www.omidyar.com/sites/default/files/Roadmap%20for%20...](https://www.omidyar.com/sites/default/files/Roadmap%20for%20an%20Antitrust%20Case%20Against%20Facebook.pdf)

On a related note, see also this work about Amazon on the Yale Law Journal:
[https://www.yalelawjournal.org/note/amazons-antitrust-
parado...](https://www.yalelawjournal.org/note/amazons-antitrust-paradox)

Meanwhile, Google is already dealing with an antitrust lawsuit from 48 US
states: [https://www.cbsnews.com/news/google-antitrust-
probe-48-u-s-s...](https://www.cbsnews.com/news/google-antitrust-probe-48-u-s-
states-launch-antitrust-investigation-of-google-dominance-in-search-ads-and-
data/)

Regardless of one's view on the merits of all these accusations of anti-
competitive behavior, it's clear that the 'political winds,' as it were, are
blowing quite a bit more in a direction that goes against these three
companies. It wouldn't surprise me if all three end up fighting in courts for
the better part of a decade if not longer.

------
neilwilson
Facebook always reminds me of a modern version of Compulink CIX - which spent
a lot of its time keeping the rest of the Internet out of its internal
bulletin board back in the early days of Internet access.

Facebook posts not showing up on the search engines and hidden behind a sign
up "pay with your privacy"-wall are very equivalent.

CIX forums still exist, but they are nowhere near as influential as they once
were. Perhaps Facebook will go the same way.

~~~
microtherion
> Facebook posts not showing up on the search engines

I'm conflicted about this one. Personally, I _wish_ that Pinterest content
would not show up in search engine results; I've yet to see one that was
useful in any way to me. I could imagine that FB results would be similarly
clogging up search results with little value.

~~~
mclightning
That's more on Search Engines to keep up with the changing times. They could
introduce exclude Social Media toggle easily for FB.

------
mrits
“We can imagine a social network market that worked more like the current
phone system: a user of one social network could post and reach friends who
were members of different social networks through interoperability protocols.”

How about SMTP?

~~~
Barrin92
forcing interopariblity and one common social network protocol akin to
railroad companies being forced to operate compatible networks would be one of
the simplest and straight forward regulations to increase consumer choice and
balance out market dominance.

~~~
gonzo41
Just for a laugh, have a read about train rail gauges. You think in Australia
a small country, this would be a simple problem.
[https://en.wikipedia.org/wiki/Rail_gauge_in_Australia](https://en.wikipedia.org/wiki/Rail_gauge_in_Australia)

~~~
mynameismonkey
Small compared to what? It's 80% the land mass of the USA, and the sixth
largest country by land mass in the world.

~~~
oska
I saw the Washington Post describe Victoria as a small state today (in its
Covid-19 coverage of the outbreak there). I went and looked up its size to
compare to US states - it's bigger than Minnesota and Utah and all but 11 US
states. I doubt the WaPo would refer to Utah as a small state.

~~~
gonzo41
I think of us as a small country because whilst large in size. we only have 7
largish cities, and 25 million people packed into them. With Sydney and
Melbourne having close to 10 million people between them.

------
shallowthought
Has Facebook, and Mark Zuckerberg in particular, ever really made a secret of
being a ruthless anti-competitive asshole? I always thought that was his one
redeeming trait - the fact that he was honest about it. True, he occasionally
claimed in interviews to be about "bringing people together", but I always
felt he went out of his way to make sure everyone listening knew he didn't
mean it.

------
rbrtl
>  by misleading users and buying potential rivals

As a Brit, I thought this was how Americans do business.

------
Cyclone_
Diaspora had the idea of decentralized social networks a while ago by having
interoperability between social networks. It never really took off, but I
think it would be a good way of limiting 1 social network from getting too
powerful.

~~~
smt88
I assume you mean legislation requiring social networks to be interoperable.

This is a good idea and is common in other industries. The problem is that an
interoperable social network effectively has an open API with no rate limit.
It's tough to solve the technical side of that in a user-protecting way.

------
lawrenceyan
Post from the same author on Google:
[https://insights.som.yale.edu/insights/the-antitrust-case-
ag...](https://insights.som.yale.edu/insights/the-antitrust-case-against-
google)

------
throwawaysea
What about Twitter? Or Visa? Or anyone with network effects and audiences
larger than 100 million users?

------
formercoder
Any firm will attempt to achieve as close to a monopoly as regulators allow,
as that’s how you maximize margins and thus value to shareholders.

------
m3kw9
Most capitalist dominance is built on anti competitive behaviour

------
scarface74
The question is how does this “monopoly” hurt consumers? It’s _social media_.
I use FB, just like most of the rest of the world. But if it died tomorrow the
world would go on.

Besides, anti trust in the US is focused on consumer harm. How does a
Facebook’s monopoly hurt consumers?

~~~
snarf21
I'm not trolling but the same way _ALL_ monopolies hurt consumers and the fair
market. It is not a hard thing to read on up monopolies across history. And it
isn't just FB. We need to stop the M&A activity that is only good for the VCs
and not the consumers. We need to start unrolling the ones that have already
happened.

~~~
noble_pleb
But the difference is that "ALL OTHER" monopolies are priced whereas facebook
is a free product. Can it be called a monopoly if your product is free? Pretty
sure, most lawyers won't have a hard time convincing a jury that it can't be.

Besides, if FB is a monopoly then so are Twitter, Google, Reddit, Quora, etc.
Its an oligopoly of sorts with each player dominating a slightly
differentiated product and all products are free of cost.

~~~
beagle3
FB's users are not it's customers. It is free for users, in the same way that
food is free for cows in a diary. Indeed, the cows did not choose to live that
life, but increasingly [not] having a facebook account is not an option.

FB's customers are the advertisers. And they pay very good money, or FB
wouldn't have had the money pay for WhatsApp, Instagram and its tens of
thousands of employees.

~~~
noble_pleb
>> but increasingly [not] having a facebook account is not an option.

but so is the case for google maps, gmail, linkedin, twitter, uber and a
zillion other services. Facebook is just like any other web service at the end
of the day.

>> FB's customers are the advertisers.

Even if that's true for arguments sake, I don't see how FB becomes a
"monopoly" in that case. There are potentially large # of advertisers buying
advertising space from potentially large # of website owners. How does FB have
a monopoly on advertiser spending?

~~~
beagle3
> but so is the case for google maps, gmail, linkedin, twitter, uber and a
> zillion other services. Facebook is just like any other web service at the
> end of the day.

Google Maps, Twitter and a zillion other services give me service without
requiring an account, so it definitely is an option (I don't have a twitter
account; I do have an old gmail account but I use Saerch, Maps and Youtube
logged out and have for ~20 years).

I can hail taxis -- in fact, I'm now staying in a country where Uber is a
regulated taxi, and there's no advantage (cost or otherwise) to using an Uber.

Linkedin is trying to force an account on me, but they haven't reached
saturation anywhere that it impairs me that I don't have one.

Facebook events, however, and WhatsApp/Messenger, have become in my experience
(and most people's by all account) the sole distribution point of a lot of
timely and important information e.g. about kids school activities. So it's
not just "another website".

> There are potentially large # of advertisers buying advertising space from
> potentially large # of website owners. How does FB have a monopoly on
> advertiser spending?

FB and Google have a duopoly due to user reach. It's really as simple as that.
It's not illegal to have a monopoly, mind you, and some monopolies are
"natural" (e.g., Google's search has classic[0] network effect, yet everyone I
know who switched off it came back due to quality issues). But once you _do_
have a monopoly, some generally acceptable actions become illegal.

[0] The fact that Google's users give feedback to Google about the result
quality (by virtue of notifying Google which link was actually selected) is a
weak network effect - but it only makes the network value linear in the number
of users, whereas FB has more of a metcalfe square-of-number-of-users value.

------
cheesecracker
Whatever. Why should companies help out their rivals? To this day, nobody is
forced to use Facebook.

I am not against helping rivals, synergies, whatever. But to claim it is
unfair not to help rivals seems silly.

Invariably, if somebody is successful, some people will emerge claiming it was
all unfair gains.

Not that I liked Facebook's approach, especially in the early days they were
harvesting address books. It's not really an uncommon practice, though. The
key point is, again, that nobody is forced to use them.

It may be a bit more difficult to avoid their tracking on web sites, but then
it is on those web sites not to use the Facebook scripts. And if you really
care, you can install an AdBlocker.

