
Facebook and the Cost of Monopoly - germinalphrase
https://stratechery.com/2017/facebook-and-the-cost-of-monopoly/
======
jimbokun
Peter Thiel:

"Apple’s iOS at the forefront, the rise of mobile computing has dramatically
reduced Microsoft’s decades-long operating system dominance. Before that,
IBM’s hardware monopoly of the ’60s and ’70s was overtaken by Microsoft’s
software monopoly. AT&T had a monopoly on telephone service for most of the
20th century, but now anyone can get a cheap cell phone plan from any number
of providers."

Um, he managed to pick the THREE OF THE MOST FAMOUS EXAMPLES OF GOVERNMENT
ANTITRUST ACTIONS, while trying to argue monopolies do not harm innovation.

Doesn't the fact all three of the previously dominant monopolies faced anti-
trust decisions against them, before major new competing technologies sprang
up, make it clear how important anti-trust actions are for encouraging
innovation?

~~~
kjhughes
Thiel is challenging you to consider that the government's antitrust actions
were _unnecessary_ and _counterproductive_ : _Unnecessary_ because eventually
upstarts find a way to leverage new technology to open new markets where
monopolists' advantages no longer apply. _Counterproductive_ because
monopolists have scale that allows programs and research that cannot develop
in companies engaged in perfect competition.

You may disagree, but to refute his argument effectively you'll have to do
better than merely reassert conventional wisdom about monopolies.

~~~
dragonwriter
> Thiel is challenging you to consider that the government's antitrust actions
> were unnecessary and counterproductive: Unnecessary because eventually
> upstarts find a way to leverage new technology to open new markets where the
> monopolists advantages no longer apply.

But none of the examples he gives demonstrates that, because they are not
examples where the monoplist was displaced independently of antitrust actions.

> Counterproductive because monopolists have scale that allows programs and
> research that cannot develop in companies engaged in perfect competition.

Antitrust action does not occur against benevolent monopolies in the US
system, it only occurs when a monopolist illegally leveraged their monopoly,
either to prevent being displaced or to monoplize another market. So, even if
benevolent monopolies are eventually displaced and good for the research they
can produce, the US antitrust system isn't directed at them.

~~~
smitherfield
_> But none of the examples he gives demonstrates that, because they are not
examples where the moboplist was displaced independently of antitrust
actions._

IBM and Microsoft weren't dethroned until roughly a decade later, so it's a
real stretch to claim any kind of causal relationship. Especially because they
maintained — to this day — their monopolies in mainframes and PC operating
systems. It's just that technological change made their monopolies less
relevant.

There was certainly a causal relationship WRT AT&T, but the conclusion to that
tale does not go "and then, American telecommunications companies became well-
known for their low prices and excellent customer service."

 _> Antitrust action does not occur against benevolent monopolies in the US
system, it only occurs when a monopolist illegally leveraged their monopoly_

That's rather begging the question. The DoJ's cases against IBM and Microsoft,
in particular, may have been financial bonanzas for the legal industry, but
the central legal claims were Kafkaesque: the supposed "unfair competition"
was that IBM bundled support services with its computers and Microsoft bundled
software with its operating system. Essentially, the DoJ's claim was that
their products offered too good a value to consumers, and ought to have been
made worse so their competitors' products would have a better chance.

IBM and Microsoft may well have engaged in genuine anti-competitive practices
(ironically, MS' sabotage of OS/2 would be a good example), but those weren't.
And maybe the DoJ could have brought cases against them that actually served
to the benefit of consumers, but again, those didn't.

~~~
nerfhammer
> the conclusion to that tale does not go "and then, American
> telecommunications companies became well-known for their low prices and
> excellent customer service."

You're kidding, right? Long distance calls during weekday hours used to cost
like $6/minute, accounting for inflation. This improved rapidly after the
breakup, not solely because of better technology, but because before that long
distance was where AT&T was making most of its money and it had little reason
to reduce costs or compete on pricing; i.e. it couldn't act competitively
basically by definition.

~~~
smitherfield
The 80's and 90's saw the introduction of digital signals, computerized
switching and fiber-optic cable networks (all Bell Labs inventions), which
significantly reduced the cost of landline calls in general, and in particular
eliminated the additional complexity associated with providing long-distance
service versus local.

This was also the period in which landline started very rapidly losing market
share to cell phones (also a Bell Labs invention[1]). Remember when they used
to charge you a dollar per text message? Remember when they used to charge you
an arm and a leg if you went over your allotted number of minutes? Remember
how they still do if you go over your ration of gigabytes?

Telecom has exactly the same razor/blade business model it did 10, 20 or 40
years ago. All that's changed is which services are the loss-leaders and which
are the bleeding-edge, desirable features that they charge you a king's ransom
for. Normal technological churn.

—

[1]
[https://en.wikipedia.org/wiki/Advanced_Mobile_Phone_System](https://en.wikipedia.org/wiki/Advanced_Mobile_Phone_System)

~~~
nerfhammer
Your thesis seemed to be that phone service was worse and more expensive due
to AT&T being broken up, no? I feel that proposition is absurd and at odds
with all available facts. You seem to be saying that competitive pressure has
no effect on prices.

I don't think that many people dropped their landlines for cell phones in the
80's, or even the 90's. I find it difficult to believe that fewer or no
competitors would lead to the same or lower cell phone bills.

~~~
smitherfield
_> Your thesis seemed to be that phone service was worse and more expensive
due to AT&T being broken up, no?_

I have no idea. What I can say is, relative to other countries and taking
account of new technologies largely invented by pre-breakup AT&T, there's no
clear improvement.

 _> You seem to be saying that competitive pressure has no effect on prices._

What competitive pressure? A national monopoly was broken up into local
monopolies with hardly any more competition. In fact, our local-level cartels
make things harder for new competitors than Ma Bell ever could; they have
agreements (mostly enforced as part of the AT&T breakup) to share their
easements and physical plant with each other as if they were all still part of
the same company, but newcomers like Google Fiber have no access, and can be
effectively held to ransom on a street-to-street and even building-to-building
basis.

 _> I don't think that many people dropped their landlines for cell phones in
the 80's, or even the 90's._

Not many people bought color TVs in the 1960s. Did their availability make
black and white TVs cheaper? Hollywood movies better, or at least more
spectacular? Not many people traveled by air back then, but did jet airliners
make cars better and cheaper? I think the answers are obvious.

 _> I find it difficult to believe that fewer or no competitors would lead to
the same or lower cell phone bills._

Maybe, maybe not. China Mobile is a monopoly but way less expensive than US
providers. Europe is an oligopoly like the US but generally less expensive.

~~~
Broken_Hippo
_Not many people bought color TVs in the 1960s. Did their availability make
black and white TVs cheaper? Hollywood movies better, or at least more
spectacular? Not many people traveled by air back then, but did jet airliners
make cars better and cheaper? I think the answers are obvious_

I don't think these are as obvious as you might think. Cell phone service is
more akin to TV stations or other television service than the hardware used to
view it. Black and white hasn't always stayed cheaper: You could buy a
"normal" color television cheaper than a small black & white portable, for
example. It merely changed.

Hollywood doesn't always do even that bit: I find BBC's "The Hogfather" (based
on a Terry Pratchett novel) to be pretty spectacular. I went through a phase
of Asian horror films, spectacularly surreal. Bollywood often has some crazy
stories. Making cars better is a matter of opinion. Do you have proof that
airlines made cars cheaper? Because most of what I find says they've basically
stayed the same price for 30 or so years. My understanding was that things
like the assembly line and advances in production technology have been the
main drivers for vehicle affordability in addition to things like a growing
used car market.

------
shostack
A meta-question for those who follow Stratechery or the Exponent Podcast and
are perhaps more deeply engrained in some of these companies being
discussed...

Do you find the analysis to typically be pretty thorough and accurate?

I love the podcast and I think I've listened to every single one at this
point, and they always talk through their reasoning at length in a logical,
(mostly) structured manner, which I love. However in the back of my mind
there's this little voice that says "they used to be management consultants
and still do consulting, so of course they are good at making their arguments
sound convincing--but how sound are they really from a strategic standpoint?"

Some of it we'll never know because it is in the realm of "what-ifs" but just
curious for others' thoughts on the signal-to-noise ratio of their content.

~~~
dilemma
Stratechery is generally very high quality but there's a lot of storytelling
and a lot of ideology in there. I'd even call it magical thinking; something
to make business analysis exciting for a wider audience than just executives.
"The arrival of artificial intelligence" is an example, because AI hasn't
arrived and it won't.

~~~
pixl97
>because AI hasn't arrived and it won't.

Ah, the AI effect in effect. AI is already here if you go by the original
definitions set in the 50/60s. You just keep moving the goalposts as it gets
better because "it cant' solve problem X yet" or "it's not quite as smart as a
human" or "it hasn't exterminated all of mankind". This is a problem with
humans when they don't want to share dominance with something else.

Intelligence is simply information processing. AGI is inevitable. ASI is
worrisome.

~~~
clarkmoody
They mentioned that exact point on a recent podcast episode :-)

------
guelo
It is important to Facebook to crush Snap, not only to maintain their
dominance of the social graph, but also to send a message to future social
networks: you can either be like Instagram and Whatsapp and let us buy you or
be like Snapchat and be crushed. Snap's IPO payday of $3 billion is probably
less than Facebook would have paid for them.

~~~
kamikaz1k
$3 billion is what Zuckerberg offered to acquire Snapchat. Given all the
cultural cachet and freedom I think they came out ahead.
[http://mashable.com/2014/01/06/snapchat-facebook-
acquisition...](http://mashable.com/2014/01/06/snapchat-facebook-
acquisition-2/#YPbz0JAbiiq9)

~~~
drzaiusapelord
Also look at how Zuck bought Oculus and turned it from VR fan favorite to this
horrible Facebook division that inches away from PC VR everyday and into
social and mobile spaces. Worse, it embraced the toxic politics of exclusives
and couldn't keep its promises on ballpark pricing, delivery dates, openness,
etc.

The Snapchat guys didn't want to be Palmer Luckey'd. They got the cash and
kept their reputation. That's quite the win.

~~~
onewaystreet
> Also look at how Zuck bought Oculus and turned it from VR fan favorite to
> this horrible Facebook division that inches away from PC VR everyday and
> into social and mobile spaces.

Because that's where the users are. PC VR is going to be a very small niche in
the larger AR/VR space.

~~~
SerLava
Maybe eventually, but early VR on mobile devices is crap. Even PC VR is pretty
rough. They need one or two more generations before they can cram a quality
experience into a phone.

~~~
awad
I am just an anecdote but even as a founder of a tech startup who is highly
plugged in, I ~barely~ use a PC when not in the office for non-work purposes
and most of my immediate network is at best on par and worse completely off
the PC bandwagon for almost all personal use.

~~~
bigbugbag
As someone who deals with normal people and their computer/internet needs,
your experience does not reflect population at large. Many regular people hate
you for pushing things and change they didn't ask for and do not want on them.

Further more, this experience of population at large is not reflecting the
actual experience of most of the population of the world that has little to no
exposure to computers or internet.

But when designing for your kind in a vacuum you will encounter some success
among your peers.

------
sgift
I don't know. The whole post reads to me like it can be summed up as "I like
Snapchat, I don't like Facebook" and some padding to disguise that. Saying
Snapchat innovated and Facebook stole also reminds me of Apple suing Samsung
for using rounded corners on phones i.e. ridiculous in my opinion. As if "hey,
let's use the camera some more" was some grand vision that only Snapchat had.

~~~
Analemma_
I think it's more that he has a distaste for Facebook's "90's-Microsoft-esque"
strategy of watching like a hawk for any potential competitors in the space,
and going to them with a "either let us acquire you, or we will crush you"
offer, and how successful that strategy has been so far. Most people have a
vague sense, if only for aesthetic and "fairness" reasons, that we don't want
the world to work like that. Unfortunately, the world doesn't care about our
wants.

~~~
spacelizard
Don't be fooled by the showboating, behind every attempt at executing these
aggressive strategies is a crumbling organization rife with disharmony and
malcontent. They would not be focusing on what other companies were doing
nearly this much if they did not feel threatened by it.

~~~
bigbugbag
Yes, when your success relies on a monopoly or dominant position, your future
is at stake if you don't use your dominant position to remove any competition
that may chip at your domination.

This is exactly why monopoly are hurting everybody but the people profiting
from it.

------
RangerScience
This is a neat article, but I'm distracted by a thought only tangentially
related: What does it mean that Facebook has a monopoly through the network
effect?

So - Diamonds. Classic monopoly. Physical good, limited natural supply
captured completely by a single business entity. (Notably, AFAIK, the same is
true for Areva and nuclear fuel).

Microsoft. Monopoly. Software goods. Their monopoly was achieved (AFAIK)
through business deals and a quality-enough+ product. Has nothing to do with
available supply.

Facebook. Network-powered monopoly. Achieved through a good product,
maintained by good-enough+ and the network effect (and their adaptability).
The number one hurdle for any FB "killer" (as opposed to unbundlers -
arguably, Instagram, as an example) is competing with FB's network effect.
There's zero supply that FB has controlled to maintain it's monopoly.

I'm not sure where this thought wants to go, but I'm trying to think up other
categories or interesting things that fall into these categories.

Thoughts?

~~~
bigbugbag
> So - Diamonds. Classic monopoly. Physical good, limited natural supply
> captured completely by a single business entity.

You should reconsider using diamonds as examples and analogy:
[https://priceonomics.com/post/45768546804/diamonds-are-
bulls...](https://priceonomics.com/post/45768546804/diamonds-are-bullshit)

It seems to me the reason you don't understand facebook monopoly because you
seem to believe it was achieved through a good product which is not at all how
it happened, (if the product is any good it's for facebook). They got there
through a lot of tricks from the black book of shunned upon dark tricks to
control supply (new registered users). They kickstarted by seizing the
universities students in ways that got them a lot of flak at the time then
grew further by breaking their initial promises and more black book tricks and
dark patterns. Once they reached critical mass and user lock-in, the people
themselves would recruit new users and further improve network effect.

There's also the shadow side that happened behind the scenes and can be
pinpointed to around the time of Peter Thiel involvement.

So "Facebook has a monopoly through network effect" means that due to the
sheer number of people registered it has an effective monopoly. If you peruse
the HN comments (or elsewhere) about facebook you will often see people that
complains about facebook being a pile of crap that they can't leave because
other people they want to stay to stay in touch are all there and some are
only there. This is monopoly through network effect.

------
deepnotderp
Remember when "innovation" was novel computer architecture or a totally new
product category and not "a social network for pictures... that disappear!"?

Pepperidge farm remembers.

~~~
blowski
Pepperidge Farm? What's that?

~~~
xeromal
If that's a genuine question, it's a meme based on a family guy segment.

~~~
akinalci
If that's a genuine answer, the Family Guy segment is based on a long-running
advertising campaign by the Pepperidge Farms brand of baked goods. I guess I'm
old.

------
slackoverflower
A lot of people underestimate that Snapchat has already captured a whole
generation and formed their network graph on their platform. Another thing to
remember is that this new 'format' that Facebook is ripping off is very much a
cultural adjustment. I do not expect Facebook's most active users right now
(30-60 years old) to be pulling out their phones out every 5 minutes, opening
the Facebook app and taking pictures of themselves and what is around them.
Snapchat has captured the audience that does do this, and it only happens on
their app.

~~~
JetSpiegel
> A lot of people underestimate that Snapchat has already captured a whole
> generation

So did Hi5 back in the day, and it still went the way of the dodo. If you
cater to attention-deficient people, they will leave in droves as soon as the
next fad comes along.

~~~
bigbugbag
So did facebook and it will follow the same path sooner or later, hopefully
sooner.

------
panabee
no analysis feels complete unless it factors both benefits and costs. this
post seems lopsided on the cost-side.

the author persuasively portrays the negative effects of a facebook monopoly,
but does not objectively delve into the benefits.

consider the subsequent disruptions spawned by AT&T research, for example.
even though AT&T itself did not commercialize most of these products (e.g.,
the semi-conductor), can anyone credibly argue AT&T did not foster innovation?

similarly, google's search monopoly produced cheaper smartphones, free
worldwide communication, and self-driving cars.

facebook's monopoly lets it advance research on AI, drones, VR, internet
access, and human-to-human communication.

it's far too early to judge if facebook harms or helps innovation.

perhaps there is enough data to assess google, however. one of google's
victims is yelp. if yelp is worth $20B instead of $3B, but we don't have all
the benefits of google's massive cash flow, is society better off? if we
repeat the process for every google competitor, we can start to engage in an
unbiased evaluation of google as a monopolist.

to clarify, i'm neither advocating for nor disparaging monopolies. the author
is very sharp and one of the best tech analysts today. i'm simply hoping for
fair and balanced analyses so we can reach informed conclusions.

------
pascalxus
I think he's making a good point here about the effect of a Facebook monopoly
on the rest of the ecosystem. Facebook stifling other social networks is the
least of our worries. The effect on the advertising ecosystem is enormous! and
Affects nearly every other internet company in the world that needs to acquire
users! In this regard, so far Facebook as enabled countless businesses to
exist with it's high value advertisement platform, but this could change as
their monopolistic powers increase.

~~~
bigbugbag
I remember reading a piece on how facebook influence on online advertising had
a very significant potential for causing a collapse of the online advertising
business model by both driving prices down and pulling advertisers away from
other websites, but also by exposing the fact that online advertising is
mostly hype and fraud eventually causing the online advertising bubble to
burst.

------
coffeymug
If you look at Linkedin, Twitter and Google+ you don't find the same features
that are available with Facebook.

What I think has kept the social network so attached to our psyches is the
same psychological principle as to why the Japanese love romanticizing high
school in anime over and over again. Facebook was created as a utility to
connect together alumni within a university. It plays on our tribalism and
need for cliques.

Just like this post mentions it also is moving towards more visual feedback.
The sensationalist adds, the lude pictures and facebook videos aren't enough.
There must be more sensory feedback even if it requires a VR headset to get
it.

Take the example of the IRC chat. There are no avatars and the names are user
created. Just like with radio in contrast to television you get less
stimulation. It doesn't engorge the senses.

I don't know the current state of things with Facebook as of right now, but I
think at some point there is going to be a movement that begins to build and
build and it will come from a deep revilement for the sensationalized news,
the abundance of ads, the platform that promotes arguing, the too-slick ease
of doing virtually everything in a virtual format. At the core of it is the
fact that long ago people sought to break away from illusory things. Think
Buddhism and Gnosticism. Now, instead, we are willingly and eagerly
enshrouding ourselves in something that looks glossier and more fabulous than
real life and it seems like we've forgotten to remember the signs along the
road in case we want to turn back.

------
sparkzilla
Your company fails when you stop innovating and start copying, and enters a
death spiral when smart employees (and investors) leave, because they know
that no amount of fancy demos and vaporware will make up for the declining
quality of the core product. Eventually the neglected core becomes weaker and
weaker to the point where it fails spectacularly. We are saw this with
MySpace, are seeing it with Wikipedia, Google Search, and if Facebook
continues on the same path, it won't be long before they suffer the same fate.

~~~
rdruxn
How is Wikipedia getting weaker?

~~~
sparkzilla
Number of editors is in decline. Presentation hasn't changed in 15 years.
Policies are moribund. No innovation. No leadership. It's just a matter of
time.

~~~
digitalzombie
> Presentation hasn't changed in 15 years

Craiglist presentation hasn't changed either.

I don't think this point is relevant if the UI is good enough or have been
this way for so long that people are used to it. Changing it would be weird.

> No innovation.

You want to innovate an online encyclopedia? How exactly do you do that? And
without sacrificing integrity?

> It's just a matter of time.

What is this time to event thing that you speak of?

~~~
sparkzilla
>Craiglist presentation hasn't changed either. I don't think this point is
relevant if the UI is good enough or have been this way for so long that
people are used to it. Changing it would be weird.

There are many problems with Wikipedia's presentation of information [1], but
the point is that, even if Wikipedia's UI was the best there was, new media
inevitably come along that change the way customers want to access their
information. For example, you may think it's 'weird' to change Wikipedia's
text-heavy UI, but kids brought up on Snapchat, WhatsApp and Instagram might
want a more visual interface for their encyclopedia.

>You want to innovate an online encyclopedia? How exactly do you do that? And
without sacrificing integrity?

Beyond UI, Wikipedia has many problems in its data structure, policies, and
integrity, by which I mean the veracity of its information, and its endemic
bias. Rather than discuss them here, please read my blog post: _Wikipedia 's
13 deadly Sins_. [1]

>What is this time to event thing that you speak of?

The rapid collapse of an incumbent site due to its monopoly position and
consequent lack of innovation i.e. the point of the original post.

Your response appears to confirm that the lack of imagination that goes hand-
in-hand with monopoly products is not just confined to their creators. Their
customers want the monopoly, until they don't. Wikipedia, Craigslist, Google
and Facebook are not unassailable. Everything dies.

[1] [http://newslines.org/blog/wikipedias-13-deadly-
sins/](http://newslines.org/blog/wikipedias-13-deadly-sins/)

~~~
r00fus
Tell me who is Wikipedia's competitor?

~~~
vkou
Who was MySpace's competitor in 2005?

~~~
jdmichal
The answer is, of course, Facebook, which was launched in February 2004. But
no one _knew_ that until a couple years later, when it opened its doors to the
general populace.

The true competitor to Wikipedia will probably look nothing like Wikipedia. It
will likely appear "suddenly" to those not in the know. And Wikipedia probably
won't _die_ die... After all, Myspace still exists. It will just be a place no
one goes to anymore, or maybe as a last resort when other options are
fruitless.

------
zeteo
>The result of monopoly pricing is that consumer surplus is reduced and
producer surplus is increased; the reason we care as a society, though [..] is
deadweight loss.

>Facebook may have a monopoly in social networking, and while that may be a
problem for Snap or any other would be networks, Facebook would surely argue
that the lack of deadweight loss means that society as a whole shouldn’t be
too bothered.

Traditionally, the main issue with monopoly has been about suppressing
competition and innovation, not about prices. Price analysis was at most an
afterthought. Here's e.g. Woodrow Wilson [1] campaigning against monopoly in
1913 (he later created the FTC and signed the Clayton Act):

"Our purpose is the restoration of freedom. We purpose to prevent private
monopoly by law, to see to it that the methods by which monopolies have been
built up are legally made impossible. We design that the limitations on
private enterprise shall be removed, so that the next generation of
youngsters, as they come along, will not have to become proteges of benevolent
trusts, but will be free to go about making their own lives what they will"

"Monopoly means the atrophy of enterprise. If monopoly persists, monopoly will
always sit at the helm of the government. I do not expect to see monopoly
restrain itself. If there are men in this country big enough to own the
government of the United States, they are going to own it"

[1]
[https://archive.org/details/newfreedomcallfo00wils](https://archive.org/details/newfreedomcallfo00wils)

~~~
bigbugbag
>Facebook may have a monopoly in social networking

Last time I checked social networking was still overwhelming done in actual
AFK social interaction across the world. In the online digital realm the king
of social networking was still email by a significant margin. A good clue
being that facebook ask for your email while email doesn't ask for your
facebook.

So please don't fall for this language manipulation trick.

------
grenoire
I'm not so sure if the neoclassical general equilbrium theory applies so aptly
to social constructs. Interesting approach, and I guess it gets the author's
point across..

~~~
trendia
I'm kinda suspicious of how it's used here, too. What exactly is the "price"
that consumers pay when they use Facebook? Their time? Their generation of
content?

What exactly is the product that's offered? Connections to their friends? News
articles?

It seems that Facebook simultaneously acts as a supplier (of connections to
people / news) and a consumer (of connections to people / news).

So, it's not really clear what the 'price' and 'quantity' axes really
represent in reality.

~~~
marcosdumay
The article is exactly about this.

~~~
trendia
The article talks a lot about how the price changes, but doesn't explicitly
say what the price represents.

~~~
marcosdumay
It's quite literal about price for advertisers, and not so literal on revenue
sharing for publishers. It explains what it is talking about both times, and
also explains that talking about price for readers is nonsense.

------
yggda
If prices do rise, that's still indirectly bad for Facebook. While in the
short term they are going to make more due to the price increase, other ad
networks will follow the trend and increase their own pricing/ restrict
supply. This would make other content on the web more profitable, and produce
better content removing some of that traffic from facebook. If high price ads
are better (less clickbait e.g.) then this would be a benefit for consumers.

------
joshjkim
surprised there's not more focus about network effects (a nod and link to
"aggregation theory", which is more about distribution), and the fact that any
social network's value, is tied to that in a big way, and therefore (at least
in theory) most social products or features's value is also tied to the size
of the network. so FB's argument could be that the value/benefit of its
copying features/products (both to itself and users) should take into account
the scale of its network. having tried to open a formatted Pages doc with MS
word, I can see MS making a similar argument. Don't even get me started on
excel vs. numbers (though excel and google spreadsheets is not TOO bad
actually...)

One thing I've found super interesting/impressive about Snap is that it didn't
try to outcompete FB in terms of sheer network size for its usage stickiness,
and instead turned smaller, tighter and more private networks into a
differentiator, while at the same time providing advertisers/brands with a
competitively massive audience - not an easy thing to identify, much less
execute on. TBD if that differentiator is enough to keep them alive vs. FB's
more traditional network-effect-driven advantage, which will be hard to beat
on its own terms. I think Snap's success will depend a lot on its ability to
avoid being tempted to play that game (see: Twitter!).

Relatedly, I think there could be a lot more thought given to how we should
think about monopolies in the context of markets where networks effects are
crucial to the business value (aka. Facebook and Google most obviously,
arguably Amazon, Apple), because one logical conclusion is that in a market
where network effects are a major factor, the biggest network should be best
positioned to provide the most value and therefore (assuming it doesn't
actively eff things up on other fronts) should continue to grow until it
dominates the market...which seems to pretty much be what happened, and it
makes pretty good sense for the most part. in these cases, it actually seems
BAD to break these networks apart, since their scale is arguably one of its
primary values to the customer - this doesn't mean of course that they can't
abuse their monopoly powers (I think they probably do to some degree and will
continue to), but interesting to think that the traditional "break up
monopolies" impulse doesn't make as much sense. this leads me to think it will
just be more consumer-protection-related regulation (under the banner of
consumer privacy, or maybe even public health, given all the "social media
addiction" thought pieces out there these days ha).

random other thought: this all also reminds me that Mark Zuckerberg has not
made a peep about wanting FB to be thought of as a "utility" in a long time
(or maybe he has and I just missed it...but couldn't find any recent
mentions), probably in part because they are now a lot more at risk than ever
before of being regulated like one (see this talk from 2013:
[https://techcrunch.com/2013/09/18/facebook-doesnt-want-to-
be...](https://techcrunch.com/2013/09/18/facebook-doesnt-want-to-be-cool/)).
Also kind of funny to hear him talk about "we don't want FB to be cool" too,
because now it seems like FB very much wants to be cool again now that Snap
has become cool and has threatening user counts.)

------
brilliantcode
What does Facebook have monopoly on? Last time I checked, Google still
dominated online ad spend.

~~~
Spooky23
Eyeballs.

Facebook is like the new TV. There's a ton of interaction with it and most of
that content is locked away from Google's reach.

They are fundamentally more powerful than Google and are underpricing their
ads.

~~~
brilliantcode
Youtube & Netflix is the new TV. I don't think lot of people sit on their
couch and watch Facebook videos all night.

I don't think Facebook can ever reach Google's level. Google is expensive for
a reason because it's highly valuable since people are searching to buy.

Facebook is cheap because you are really casting a wide net and hoping to
catch a fish. This is less efficient than Google's Adword.

~~~
Spooky23
Maybe not, but they spend an hour a day wandering through the feed.

Google is more transactional. Facebook are display ads that are displacing TV.

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whatnotests
I kept reading the title as "Facebook and the CAST of Monopoly" \- needless to
say, the article made no sense since I was looking for Uncle Moneybags.

