Monday, September 25, 2023

OPINION AND ANALYSIS | 10-07-2021 08:20

Is Facebook a monopoly? A few ideas to help the FTC out…

For anyone operating in the same digital ecosystem as Facebook, it is painstakingly clear that Zuckerberg’s creation has excessive market power and uses it to its own benefit. The same can be said about Google and a few other Silicon Valley giants.

There’s been a flurry of articles of late regarding a recent ruling by United States District Judge Jeb Boasberg that threw out the Federal Trade Commission’s anti-trust complaint case against Facebook. Indeed, initial coverage by major news outlets such as The New York Times and The Washington Post painted it as a victory for the social media giant owned, controlled, and run by Mark Zuckerberg. The market agreed, taking Facebook’s monetary value north of US$1 trillion. Yet, that conclusion is hardly derivable from the facts, as Judge Jeb made clear in his opinion, indicating that the FTC can amend its case – if it fixes some of its key arguments.

For anyone operating in the same digital ecosystem as Facebook, and particularly for news outlets (who both compete with and depend on the social media juggernaut for a substantial portion of their revenues), it is painstakingly clear that Zuckerberg’s creation has excessive market power and uses it to its own benefit. The same can be said about Google and a few other Silicon Valley giants. While anti-trust law is very specific and technical in how it defines the concepts on which it operates, a common sense analysis shows that Facebook is indeed a monopoly, or maybe an oligopoly, and that without some restraint it will cause irreparable harm to the digital ecosystem, and particular harm to the flow of information in the modern age. This is not to say that Facebook, Google, and the rest of them are monstrous companies acting in bad faith. The value they have created is incommensurable, and they deserve to be rewarded for it (as they have been, just look at their market capitalisation).

A monopoly, according to Judge Boasberg, is defined under federal United States law as an actor having “the power to profitably raise prices or exclude competition in a properly defined market.” According to the judge, the FTC failed to lay the basis for accusing Facebook of being a monopolist, giving a vague but apparently sufficient description of the market breadth but failing to show it truly exerts market power, normally defined through indirect evidence of a share of the market that roughly exceeds 60 percent.

Facebook and its major products, namely Instagram and WhatsApp, are nearly inescapable on a global basis, the digital equivalent of the “town square” in Zuckerberg’s own words. For a user in an increasingly digitalised global world, Facebook’s products represent the entry point into the world of digital intercommunication. While Google and its host of products represent the major access point into the vast expanse of information hosted on the web, Zuckerberg’s companies control the entryway into interpersonal interaction, while together they have truly become the gatekeepers of the flow of information in our day and age. Metrics to substantiate these claims abound, with Google taking the lion’s share of the market for mobile operating systems with Android, Internet browsers with Chrome, and of course search through Google. Facebook, in turn, absolutely dominates social media interaction through Facebook and Instagram, and messaging through WhatsApp and Facebook Messenger. Other large players in the space – from Microsoft to Apple, LinkedIn and ByteDance (TikTok) to LinkedIn – remain marginal, particularly when looked at from a Western perspective.

Thus, users — or consumers — are essentially bound by the rules and decisions being taken by these massive multi-national corporations with little to no alternatives. Either go through the troublesome task of navigating the worldwide web and its derivatives relying on fragmented and therefore more cumbersome substitutes, or renounce a major digital presence. If access to the Internet has become an essential human right, then there’s really no way around Google and Facebook.

What’s so bad about that, one may ask, if all these services are free? From email to search, from messaging and video calls to posting and commenting, the creations of Mark Zuckergberg, Sergey Brin and Larry Page allow us instant access to a trove of information and instant communication the likes the world has never seen without having to take out our wallet. This commanding audience, though, has given these and a few other companies a level of power that equates to an authoritarian’s wet dream. The control a narrow group of homogenous engineers working out of Silicon Valley have over our minds and our privacy is beyond that of any government in the history of mankind. This puts them in a position to , willingly or not, determine the way we interact and build our subjectivity, ultimately impacting our decision-making processes. The exponential growth of disinformation — imprecisely defined as “fake news” — is directly tied to their oligopolistic power.

The genesis of this power is two-thronged. The products these companies have given us, at no upfront monetary cost, have been so revolutionary that they have led to their worldwide adoption, no questions asked. Its sustainment has been fuelled by an unparallelled business strategy centred on digital advertising that ultimately relies on the manipulation of attention. But this business model has been built at the expense of competitors in the attention economy, which have been abused to the edge of extinction.

The digital advertising ecosystem has been the guiding force behind the evolution of the digital space for the past several decades, meaning that the flow of information in our societies has been determined by the quest for greater revenues of the Silicon Valley giants. Because these companies control both the flow of information and the revenues said information generates, they have become the true gatekeepers of the modern world. Both Google and Facebook have created integrated digital advertising stacks that control every link of the chain, starting with the “inventory,” or the time we each spend using their platforms. This inventory is packaged and sold programmatically through the world’s largest exchanges — akin to stock markets but dealing in human attention — fuelled by massive troves of personal data we never knew they owned. Ultimately every actor in the information ecosystem – from The New York Times to Líonel Messi – ends up paying the Kings’ tax, whether as a user (in personal information and attention) or as a content producer (in inventory and fees).

The damage being caused to the consumer is based on a degradation of the information ecosystem that the Zuckerbergs of the world helped to build. And the control of this attention monopoly has only grown deeper, deepening the economic imbalance that becomes harder and harder to revert. Real competition would make the digital ecosystem more transparent, ultimately favouring quality over clickbait. The central node of this problem is in the digital advertising market, which Facebook and Google, of course, also control.

Agustino Fontevecchia

Agustino Fontevecchia


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