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Is Facebook a Monopoly? And Why you should care

According to analysts at Morgan Stanley, they receive around 85% of all online advertising spending.

Google and Facebook are among the most valuable companies in the world, and in many ways, they are effective monopolies. According to analysts at Morgan Stanley, they receive around 85% of all online advertising spending. However, US authorities have not seriously used anti-trust laws against them, unlike in the European Union, which last year fined Google 2.4 billion euros and Facebook 110 million euros for anti-competitive practices.

Is Facebook a Monopoly?

Monopoly on the basis of Market Share

Yes and No. The answer depends on which particular features of Facebook you focus on.

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Social network sites worldwide as of January 2018, ranked by number of active users (in millions) – Statista

As a Social Media Platform, the answer is no. YouTube is Facebook’s biggest competitor and through the years, have shown to edge out Facebook in terms of user count and time spent on its platform. In case you were wondering, yes, though you may only be familiar with YouTube as a place to watch funny videos and documentaries, YouTube is, in fact, a social media website. That is the problem with trying to determine Monopolies based on their active user figures. The term, Social Media, is very vague and general, encompassing vastly different companies that may not even share similar target demographics.

However, the sheer dominance of Facebook as a Social Media platform cannot be understated. When somebody talks about “Social Media”, you’re touching on Facebook, Messenger, Instagram or Whatsapp in one form or another. One just has to look at the statistics for confirmation of this – Of the top 7 Social Networks by Monthly Active Users, the Top 4 belong to Facebook.

 

efcdaAs a Digital Advertising Platform, Facebook doesn’t meet the textbook definition of a monopoly. Facebook dominates digital advertising on social media, controlling the majority of such spending. However, Google is actually bigger, raking in $35 billion in total digital ad dollars in the US in 2017 (mostly through search and YouTube), while Facebook claimed $17.4 billion. Together, the duopoly controls 84% of global digital advertising dollars.

As a News Platform, the answer is closer to Yes. According to a Pew Research poll, the number of Americans getting at least a portion of their news from social media sites has increased from 62 percent in 2016 to 67 percent in 2017. 45% of American get their news on Facebook, 18% on YouTube and 11% on Twitter.

Monopoly on the basis of stifling competition

“Every monopolist tries to enlarge the market definition such that his own share of it is insignificant,” said Marshall Steinbaum, the research director at the Roosevelt Institute, the nonprofit partner to the Franklin D. Roosevelt Presidential Library and Museum. “But the fact that he couldn’t name his competitors spoke volumes: Facebook controls the network over which information is proliferated, and it decides who sees what–always to its own benefit. That is a textbook monopolist and it is a company that in its current form cannot be allowed to exist.”

Example 1: SnapChat

chartoftheday_9086_daily_active_users_instagram_stories_snapchat_nRemember when Facebook announced that its newest Instagram feature, Stories, has surpassed 200 million daily active users? “New,” of course, is relative: The disappearing-video format, which has redefined social media, was invented and pioneered by Snapchat, before being shamelessly ripped off by Instagram. There’s a long, not-so-proud history in the tech industry of larger companies enfolding smart features and ideas from smaller ones into their platforms, often killing small businesses in a single move. Is this simply a dishonest practice or an anti-competitive, monopolistic one?

On May 18, 1998, the Department of Justice filed antitrust charges against Microsoft following the browser wars that led to the collapse of Microsoft’s top competitor, Netscape. Just as Microsoft was accused of using the size of its user base to win browser wars, Facebook looks as though it’s using the size of its user base to win social wars.

Example 2: TSU Social Network

On 25 September 2015, users of social network site Tsu discovered that they could no longer post items on Facebook or Instagram mentioning the URL “Tsu.co”. TSU is a new social network that promises to pay its users for posting content to its site. You can’t share a post to a Facebook feed, leave an Instagram comment or send a Facebook Messenger message containing the URL. Tsu’s CEO claims Facebook went so far as to retroactively remove any mention of the site from its archives. You can’t even share news stories about Tsu.

Due to TSU’s business model which incentivized the sharing of links to the site, Facebook seems to have flagged the site for spam. Facebook is within its rights to prevent spam, but its scorched-earth policy of retroactively removing posts seems overkill. Either way, this clearly showcases the power Facebook has over what their users can or can’t see.

Why you should care

Privacy & Data Protection

Companies like Facebook and Google are free, or at least the perceived price is zero, so most people do not view the monopolization of these companies as a problem. However, it is not free at all. We are giving up a lot of our personal data in exchange for access to these social platforms. The effects of such monopolies tend to be felt by the consumer in an indirect way so it doesn’t generate much of a reaction from the market.

A highly accurate portrait of your life, down to your politics and your friendship preferences, is held somewhere on a server you don’t own or control. That is, you might not care that Facebook has this data, but what happens when Facebook gives it away, or if Facebook were to be more directly breached?

Political Influence

As stated above, Facebook is a huge player in the media & news industry which plays an important role in any democracy. There is a huge risk that Facebook’s dominance will impact countries’ political outcomes.

While political scientists remain sceptical about Facebook’s ability right now to directly affect political outcomes, its ability to manipulate information and give people what they want to see is growing in capability and speed with each passing day.

1 – Political Filter Bubble

For years, political scientists have wondered whether the social network’s news feed selectively serves up ideologically charged news while filtering out content from opposite political camps. Researchers call it the filter bubble: the personalized view of the Internet created through tech company algorithms.

227_big01Although the posts scrolling along the site’s news feed may seem like a live stream from your friends and pages you liked, Facebook actually uses an algorithm to filter out and rank those posts before they reach you using something known as a “relevance score.” Liberals and conservatives may rarely learn about issues that concern the other side simply because those issues never make it into their news feeds. Over time, this could cause political polarization, because people are not exposed to topics and ideas from the opposite side of the fence.

2 – Facebook Censorship

Many Americans have shown concern that Facebook is biased against conservative news outlets. The threat was raised by Zuckerberg’s pledge to battle “fake news” and “hate speech” — terms that have long been used by the left to silence conservatives and supporters of free speech.

Mark Zuckerberg responded: “First, I understand where that concern is coming from because Facebook and the tech industry are located in Silicon Valley, which is an extremely left-leaning place. And this is actually a concern that I have and that I try to root out in the company is making sure that we don’t have any bias in the work that we do, and I think it is a fair concern that people would at least wonder about.”

 

Do you think Facebook is a Monopoly?

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