It's the fact that Facebook is "Facebook" that is the problem. That you can't imagine Facebook's equal being viable in any way, other than to mention the wagons and horses of the internet. This is not to comment on a level of sophistication, but features. What can you sell on TikTok through TikTok? It's a category error to equate them with FB. Facebook has cultivated this state of affairs, and they have gone out of their way to interfere with the success of companies it views as competition.[2]
This is even before we get to the use of Facebook to create negative externalities, for which it provides powerful tools. On purpose.
1. https://en.wikipedia.org/wiki/Sherman_Antitrust_Act_of_1890#...
2. https://techcrunch.com/2020/07/29/in-antitrust-hearing-zucke...
It's not actually illegal to be a monopoly but to illegally abuse your market position leading to anti-competitive behavior.
Unfortunately, it's never enforce properly as the FTC doesn't have any teeth.
I think the only way we're going to solve this is to actually TAX these companies appropriately. This is one of the major reasons they metastasize.
I’m still confused as to which “market” is harmed: advertisers? Facebook users? other social networks?
If the market is Facebook users, what’s the precedent in asserting this level of harm to a market that consists substantially of non-paying users of an inessential service?
Even with scare quotes it's not a multiple: the social network of Facebook users is an advertising market. You don't have to be a snot-nosed growth hacker to see that FB has a monopoly position in advertising.
Here's a test: does FB have any reason to care about the quality of whatever is being advertised in any one ad? Where are you going to advertise if FB keeps putting your ads for your doctor's office next to ones for a child-rape rock opera and/or "COVID-19 is a hoax" seminars? What is your recourse, switching your advertising to Parler and LinkedIn? NYTimes dot com? The 72 next most popular social networking sites around the world? Surely VKontakte runs a clean house.
Again, look at railroads. In the Trust era, trains were not the product, were not the market. Transportation was.
Here's a nice little rundown: https://twitter.com/jason_kint/status/1336813617736507397
Several people will say, "try not having a Facebook account and participating in X," where X is some mandatory part of your life, such as your children's schooling, keeping up with relatives, job-related stuff, social clubs or organizations, etc. It might not be impossible, but it's an undue burden in some cases.
It's impossible to keep up with college affairs without Facebook, as a Facebook group is the primary method of communication and organization.
It was even worse before the pandemic, since there were no MS Teams or Google Classrooms for each subject. If an assignment was released, it was the representative's Job to male sure it reaches everyone. Guess what did they use?
Oh the assignment is delayed? TA announces on Facebook group. Midterms Time table? College Facebook page. All college-wide announcements were made through its Facebook page.
Facebook is practically essential for college life. You could say it's the College's fault, but that's not our discussion. What's important is that I can't delete my Facebook without causing a lot of pain in the ass for myself.
We had a few decades of true antitrust, but the efforts to undermine it were successful. Check out Goliath by Matt Stoller for a decent history.
These don’t really compete with WhatsApp, which is cross platform, not tied to an employer, doesn’t require an invitation, subscription, friend network, setup to use, among other things.
See Skype, for example - the largest market penetration for a period of time and practically no one uses them any more. They were video-centric, yet the user base is already there for an extension into a primarily text medium. Not tied to an employer, doesn't require an invitation, subscription, friend network, setup to use, etc...
Whatsapp has other competitors currently. Telegram and Viber come readily to mind, and I am certain there are other services that I'm not aware of, the old fart that I am.
Whatsapp was incredibly popular in most of the underdeveloped world, where it became the de facto messaging app because of the low data requirements and ubiquitousness (and probable subsidies via the ISP provider). This was prior to FB buying them. Out of my group of contacts, the Telegram app notified me over the past year that roughly 2 dozen have signed up for it, e.g. That's another (albeit anecdotal) sign.
I understand the antagonism toward FB/Whatsapp/Instagram, given the consolidation of social networks within the purview of one entity, but not a single one of those services is a monopoly.
Could very well be I don't understand the intricacies of the law, and such consolidation is perhaps illegal for the betterment of society, but I'm not convinced that's the case still. Microsoft, for example, was accused of monopolistic behavior because they had enough power to pressure manufacturers to bundle IE with the OS. No such thing is happening in this situation. IANAL, but that's my simplistic take on it.
I stand to be corrected.
Hindsight is 20/20 but at the time of acquisition it was far from a sure thing and it's safe to say that without Facebook resources Instagram would not be what it is today.
So yeah, there's really no "competition". Either you have whatsapp or you don't talk to people.
And it's highly used for cross-business communication in Europe, I can tell you that.
Either you use WhatsApp or you don't talk to people.
And I'm not saying this is a bad thing, really.. I think "monopolies" have their place in standardizing things that we do and it makes it convenient.
(Side note: if fucking Apple would open up iMessage on android/windows they would OWN the chat market in a matter of minutes in the US)
But there does get to a point where you cannot say "people use it because they like it". Most people use it solely because everyone else uses it.
Just like Facebook. There is no "alternative" for real-life profile social media. If you want to use that type of social media, Facebook is the only thing whether you like it or not.
Facebook started off in a market with Orkut, Myspace, Friendster and along came Path, Twitter, Google+. Facebook had network effects and people gravitated towards it.
So this is basically saying network effect is bad. You cant get too popular.
Which would mean that the lawsuit would fail. pretty much everything that happens outside of the USA is irrelevant for this lawsuit.
Even in countries where iPhones are ubiquitous the cross-platform nature of Whatsapp and the fact that everyone from your friend to your grandmother is on it, makes it dominant.
Yes you could use Slack to message your friends like you would on Whatsapp. The experience won’t be the same, and setup will be a hurdle. But would you use Whatsapp to replace Slack at work?
I think the term “compete” is used very broadly here.
do you have data to back up that claim?
https://www.similarweb.com/corp/blog/mobile-messaging-app-ma...
And as an alternative source:
https://www.messengerpeople.com/global-messenger-usage-stati...
"4. iMessage
Communication apps like WhatsApp are available on practically all devices, whereas native apps like Apple’s iMessage (and now Apple Business Chat) are limited to one provider.
However, the user base for iPhone is constantly growing in the USA. A lot of adolescents prefer iMessage to apps like Snapchat in order to reach out to their friends.
Since iMessage is a pre-installed service of Apple, there are no official messaging usage statistics as they keep those “in-house”. Looking at the ever-growing demand and distribution of iOS devices though, we can assume that the pool of iMessage users is growing. In the fiscal year of 2017, Apple reached a quantity of 216.76 million iPhones."
iMessage no worky for groups because you'd be excluding the Android users. Group SMS... I don't think anyone over here is even aware that's an option. I only know about it from Americans on HN saying they use it.
"The antitrust laws prohibit conduct by a single firm that unreasonably restrains competition by creating or maintaining monopoly power. Most Section 2 claims involve the conduct of a firm with a leading market position, although Section 2 of the Sherman Act also bans attempts to monopolize and conspiracies to monopolize. As a first step, courts ask if the firm has "monopoly power" in any market. This requires in-depth study of the products sold by the leading firm, and any alternative products consumers may turn to if the firm attempted to raise prices. Then courts ask if that leading position was gained or maintained through improper conduct—that is, something other than merely having a better product, superior management or historic accident. Here courts evaluate the anticompetitive effects of the conduct and its procompetitive justifications."
Does FB unreasonably restrain competition? (My answer is no)
Does FB have an alternative? (Mewe/Parler/Gab etc. - Mewe being the most direct alternative)
Then courts ask if that leading position was gained or maintained through improper conduct—that is, something other than merely having a better product, superior management or historic accident. - I'd say no.
I don't see anything this lawsuit stands on.
[1] https://www.ftc.gov/tips-advice/competition-guidance/guide-a...
For a time people had few alternatives to Instagram or Facebook, which were effectively in competition with each other. This meant that has Facebook monetised your data more, ie increase prices, users were forced to pay if they wanted to stay on a popular social network.
TikTok is a recent phenomenon. Secondly it is not enough to consider the UX cost of switching to another platform but also the network effect. Is Mewe/Parker/Gab really a substitute for me if I don’t enjoy the network effects I have on Facebook or Instagram?
It will be interesting to see the government prove this for Facebook while ignoring the 800lb gorillas of Google/Doubleclick or Amazon’s ad network.
The notion that FB increase ad prices by increasing the supply of ads is completely insane though, and I hope that's a misunderstanding by the parent poster.
FB/IG have an auction-based ads system, which means that you pay what other advertisers think the user is worth, rather than what you think the user is worth. In such a system, prices increasing (along with supply) is a symptom of massive, massive demand rather than a nefarious plot on FB's part.
Don't get me wrong, FB have done a bunch of shady stuff over the years, but this lawsuit seems pretty wrongheaded to me.
However the cost that users pay for engaging on the platform is the use of their data. So I guess what I meant by aggressively increase the “price” of advertising was referring to the hidden cost of Facebook being able to serve adverts in the first place.
As others have pointed out, anti-monopoly legislation os largely about preventing firms from abusing monopoly power to increase prices. If you consider the cost of using a social network to be the data the user provides, then the more data the user gives up to the use the social network, the higher the cost. Because of the strong network effect, users may have little choice but to stay on the platform if they wish to engage in the social network. The notion is that Facebook are abusing the stickiness of their social network by increasing monetisation of user data, knowing that users won’t easily leave.
By purchasing Instagram and WhatsApp, at the time the two biggest threats to engagement on Facebook the website, Facebook the company are able to coalesce the three networks, making stickiness stronger, making it easier to raise prices (consumption of user data in exchange for adverts) and thereby abusing a monopoly position.
Unfortunately this is a wildly speculative argument, which is unlikely to find favour with regulators in this case.
Even if it weren't speculative, how do you define the value of data? Is it by bits and bytes, or as the expected lift from incorporating it into a model? If I improve FB's/Google's ad models, do I increase the cost of all of their users? That seems ludicrous to me, but maybe that seems fine to you.
> However the cost that users pay for engaging on the platform is the use of their data. So I guess what I meant by aggressively increase the “price” of advertising was referring to the hidden cost of Facebook being able to serve adverts in the first place.
This is a trade. You and I may think this is a poor trade, but it's one that many, many users make (and like) daily. In no sense is it a cost.
Additionally, if (hypothetically) one chooses to make advertising-supported websites illegal, then that leads to FB (and Google) shutting down, which I don't see as a net positive for the world. (Certainly most of their users wouldn't think so).
> By purchasing Instagram and WhatsApp, at the time the two biggest threats to engagement on Facebook the website, Facebook the company are able to coalesce the three networks, making stickiness stronger, making it easier to raise prices (consumption of user data in exchange for adverts) and thereby abusing a monopoly position.
So I don't agree with your argument about prices, so I'm not going to engage with it further (if you need to explain what a standard term means in the context of your argument, that's normally a warning sign).
However, IG had 20mn users when it got acquired. The consensus here was that it was a terrible idea and that FB would shut it down. We're now in a world where it has 1bn users and mints money for FB. Now, it definitely looks like FB acted badly.
But consider the alternative. FB are blocked from buying IG, so IG need to set up a sales team, an adevertising method and epxand globally. None of these things are cheap or trivial. There does exist a world where IG competes on a level-playing field independently, but I would argue that at least 80% of the time, this hypothetical leads to IG either under-performing or flaming out.
And to be fair, at the time of the IG purchase, the biggest threat to Facebook was mobile (once upon a time, FB had no ads on mobile).
Whatsapp again, should have been stopped by the EU, but there were little to no competition concerns raised within the US based on that acquisition, as nobody in the US used Whatsapp at the time.
I admit it is speculative but the argument encapsulates the abuse of the social network as I see it, which is why I'm running with it. It remains to be seen what angle the regulators will present when proving abuse of monopoly power.
However I cannot separate what Facebook is able to do on its social network without consequence from the idea that Facebook is an abusive monopoly.
> If I improve FB's/Google's ad models, do I increase the cost of all of their users? That seems ludicrous to me, but maybe that seems fine to you.
Consider the "user price of improvement". Suppose that an initial model m1 only needs to regress on a users age, gender and location to guarantee a clickthrough rate of x%. As the social network grows and there are more users, a larger variety of adverts and longer engagements, all else fixed the clickthrough rate will go down if the users start seeing more irrelevant adverts (more ad bidders but same relatively static input features) as well as repeated adverts (longer engagement times but same input features).
In an effort to increase clickthrough rates either beyond x% or at least to maintain x% in a growing network, the model needs more express power. So m1 is expanded to m2 now using accumulated likes. Fine likes are activity which is generated on FB so that's fair game. But there's a small cost in user privacy: suddenly adverts can be targeted based on your likes.
The network grows and clickthrough rates must still be improved. m2 is expanded to m3 by incorporating activity with friends, including mutual likes. Again this is generated on the social network, but there is a privacy cost: adverts are served based on public and perhaps private interactions.
The network grows and clickthrough rates must still be improved. m3 is expanded to m4 using browser trackers, so now your activity outside of Facebook is used to serve adverts: the privacy cost is increased and suddenly becomes real. FB serves adverts to you based on anything you do on the internet.
<side note: I recently ordered widget A using my laptop browser and the next day I saw an advert on IG for widget A from a competitor on my mobile device. I don't have an FB account and I'm not logged into IG on my laptop browser. I have never seen adverts for widget A on IG until this moment>
Back to my argument. Now at this point FB has a strong social network based on your activity and your friends' activity as well as external network effects based on browsing trackers, log-in with FB identities, as well as your friends' external browsing activity.
The transition from m1 to m4 has required using more and more of your personal data (whether public or private) in order to maintain a clickthrough rate of x%.
> This is a trade. You and I may think this is a poor trade, but it's one that many, many users make (and like) daily. In no sense is it a cost.
Each time the model is improved by adding additional features, those features aren't acquired for free. They're acquired by deliberately mining users' personal information. You might not think this is the case, because data is data and data is stored in bits and bytes, but it has representational value that in many parts of the world (most notably the EU) is protected.
In other words, the change from m1 to m4 in order to serve adverts has incurred a cost in terms of the private data a user must give up in order to receive adverts that are relevant to them (ie maintain a clickthrough rate of x% or higher).
So yes in this sense it is a cost.
Furthermore, in the 21st century, data is a clearly a resource, and has monetary value. It can be mined and gathered from users, which is then used to generate revenue from advertising. Users are not compensated for their data but instead are provided with a free service. If the alternative was to pay for the service, what would the monetary value be? That is the opportunity cost of providing data instead. So yes in that sense it is a cost.
Now let's consider consent. Facebook makes all users accept a privacy policy which constitutes as consent (the minimum requirements now may be higher but the tactic is the same). If the user disagrees they can't use the service. In most cases the user agrees because they want to use the service.
However as Facebook has a large social network and users' don't have many alternatives, the incentive for users to agree to the privacy policy becomes stronger.
If Facebook didn't acquire Instagram, then that last effect is weaker because users' have an alternative. If Facebook mined more data then Instagram, then Facebook is more "expensive" to use than Instagram and vice versa. Competition between the two networks would increase supply and reduce the cost of data required to use either network.
By acquiring Instagram and merging social network graphs (inputs to the model), Facebook effectively remove that dynamic, which gives them monopoly power to keep mining more and more data for marginal or perhaps zero benefit (an increase in costs).
Whether that dynamic would actually play out between users in a world where they are competing networks remains to be seen. Maybe it doesn't and for any network its a race to the bottom in terms of privacy regardless of the number of players.
> But consider the alternative. FB are blocked from buying IG, so IG need to set up a sales team, an adevertising method and epxand globally. None of these things are cheap or trivial. There does exist a world where IG competes on a level-playing field independently, but I would argue that at least 80% of the time, this hypothetical leads to IG either under-performing or flaming out.
Both of these outcomes are speculative, but I'm not convinced about the 80% figure. I'm not sure that IG needed FB alone to get to a billion users. Many of those users aren't necessarily people and are companies, organizations and other entities which use IG for engagement. It's enough that people spend more time on IG than FB the app or website to convince those entities to engage on IG. Not sure what the proportions are exactly but just giving an example.
Anyway, good points you've made and I've learned something so I'm willing to call it a day. I wrote this last essay simply because many of the points you made were simply too dismissive of what I said, without substantiation. Of course I'm not claiming to be right about how regulators will approach their argument, just stating a viewpoint on how FB is able to increase costs for the user, in terms of privacy, while being able to get away with it.
> Additionally, if (hypothetically) one chooses to make advertising-supported websites illegal, then that leads to FB (and Google) shutting down, which I don't see as a net positive for the world. (Certainly most of their users wouldn't think so).
Not sure why you brought up the prospects of advertising-supported websites being illegal. The purpose of regulation is to control abuse. GDPR in the EU does not making advertising illegal, but rather places limits on what information can be used. In the same way that road rules don't make driving illegal.
Both of these outcomes are speculative, but I'm not convinced about the 80% figure. I'm not sure that IG needed FB alone to get to a billion users. Many of those users aren't necessarily people and are companies, organizations and other entities which use IG for engagement. It's enough that people spend more time on IG than FB the app or website to convince those entities to engage on IG. Not sure what the proportions are exactly but just giving an example.
IG had less than 20mn users when acquired, literally nobody cared about it outside of the early-adopter crowd in SF. In general, value comes from execution rather than the idea, and I am definitely not convinced that IG would be anywhere near where it is today without Facebook, which leads me to believe that breaking it off at this point is pretty unfair.
Like, another way FB could have competed would have been to buy IG and let it die slowly. Given this anti-trust suit, that would appear to have been the smarter move, but it definitely wouldn't be overall better.
Lets also note that FB became popular not just because it was good, but because it was good and always stayed up, regardless of user growth. That has probably been one of the major engines for IG growth.
Finally, the success of IG was also driven by the use of free advertising on FB, without that it would have taken a lot longer (and cost a lot more money) for them to reach the scale that they have now.
Again, thanks for replying. I'm still not convinced by your model of the cost of IG/FB, but I appreciate that it's reasonably well thought out.
[1] https://www.reuters.com/article/us-facebook-instagram-idUSBR...
I don't use Instagram and have used Whatsapp prior to FB acquiring it. There has been no "roping in" of any sort that I have noticed, and while my experience is clearly anecdotal, there doesn't seem to be anything to link to that that I've observed. Perhaps I'm naive, but it would be good to see something concrete in this regard.
"The monetisation of your data in exchange for adverts can be seen as the cost of the platforms. By aggressively increasing advertising on Instagram and attempting to take steps to monetize WhatsApp, Facebook are raising prices. As far as I understand the question is whether it is their abuse of monopoly power that allows them to do this."
I guess I would call that profit-making, not "aggressive monetization". The alternatives exist and they are all easily accessible. Put yourself in their shoes - would you run a non-profitable enterprise? At what cost? Let's not lose touch with the fact that this is still a capitalistic economy.
The lawsuit specifically cites Zuckerberg talking about acquisitions (in this case, the failed Twitter acquisition) as giving "extra time... to get our product in order without having to worry about a competitor growing".
The allegation here is anti-competitive behavior. There are plenty of things you an do that are anti-competitive and illegal without actually achieving a monopoly. The classic example is price fixing but there are many others.
Unsurprisingly, the actual linked article in this thread spells out these allegations of anti-competitive actions on Facebook's part.
Twitter, TikTok, and HN all thrive on strangers communicating with each other.
Having an entry in Facebook’s users table is a long way from using Facebook for your social networking to the exclusion of competitors.
"Social advertising".
I have no knowledge in this area, so just throwing it out there for more informed minds to fill in the blanks.
> illegally maintaining its personal social networking monopoly
"Monopoly" is a term that's fairly overloaded/misunderstood; while in economics refers specifically to a situation where there is a single supplier for a good/service (https://en.wikipedia.org/wiki/Monopoly#Market_structures), in the legal definition "monopoly power" is defined much more loosely, as "the power to control prices or exclude competition" in the US (e.g. https://www.justice.gov/atr/competition-and-monopoly-single-...), and there are complex tests for monopoly power in the EU including >50% market share which I'm less familiar with.
I think common discourse tends to interpret monopoly in the economics sense, which leads to confusion when we look at antitrust enforcement like this. Not to mention that under antitrust laws you don't even need to have (loosely defined) "monopoly power" to be engaging in illegal anticompetitive behaviors.
Specifically analyzing those competitors:
LinkedIn is a business social network, not a personal social network as they define it. Forums are not "social networks" as commonly defined (graph of relationships).
Twitter is a competitor, but they have far less market share, e.g. see https://www.t4.ai/industry/social-media-market-share#:~:text... which puts Facebook at 69% of social media users, (a monopoly in most definitions), while twitter is at ~8%. Somewhat confounding because users can be on both, but the magnitudes are what's important.
TikTok is a valid competitor too, but again they don't have nearly as dominant a position as Facebook <25% of FB's MAU according to https://datareportal.com/social-media-users?rq=tiktok.
I think Ben Thompson has the best analysis of antitrust as it pertains to Facebook, as he deeply understands the market dynamics that give Facebook and other large tech companies their market power, e.g. see https://stratechery.com/2017/manifestos-and-monopolies/.
And since WhatsApp is a chat app, how about all the other chat apps I am using? iMessage, Slack, Teams.
Does this action has any merit or is it just the usual political posturing and games?