We are a nation with a tradition of reining in monopolies, no matter how well intentioned the leaders of these companies may be. We already have the tools we need to check the domination of Facebook. We just seem to have forgotten about them. America was built on the idea that power should not be concentrated in any one person, because we are all fallible.
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Jefferson and Madison were voracious readers of Adam Smith, who believed that monopolies prevent the competition that spurs innovation and leads to economic growth. If we would not submit to an emperor, we should not submit to an autocrat of trade with power to prevent competition and to fix the price of any commodity. More legislation followed in the 20th century, creating legal and regulatory structures to promote competition and hold the biggest companies accountable.
Starting in the s, a small but dedicated group of economists, lawyers and policymakers sowed the seeds of our cynicism. Over the next 40 years, they financed a network of think tanks, journals, social clubs, academic centers and media outlets to teach an emerging generation that private interests should take precedence over public ones.
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By the mids, they had largely managed to relegate energetic antitrust enforcement to the history books. This shift, combined with business-friendly tax and regulatory policy, ushered in a period of mergers and acquisitions that created megacorporations. In the past 20 years, more than 75 percent of American industries, from airlines to pharmaceuticals, have experienced increased concentration , and the average size of public companies has tripled.
The results are a decline in entrepreneurship , stalled productivity growth , and higher prices and fewer choices for consumers.
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The same thing is happening in social media and digital communications. Because Facebook so dominates social networking, it faces no market-based accountability. This means that every time Facebook messes up, we repeat an exhausting pattern: first outrage, then disappointment and, finally, resignation. The overhead lights were off, and a group of us were pecking away on our keyboards, our year-old faces half-illuminated by the glow of our screens.
My eyes widened.
Facebook was competing with Myspace, albeit obliquely. We were focused on college students at that point, but we had real identities while Myspace had fictions.
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Our users were more engaged, visiting daily, if not hourly. We believed Facebook surpassed Myspace in quality and would easily displace it given enough time and money. Back then, we competed with a whole host of social networks, not just Myspace, but also Friendster, Twitter, Tumblr, LiveJournal and others. The pressure to beat them spurred innovation and led to many of the features that distinguish Facebook: simple, beautiful interfaces, the News Feed, a tie to real-world identities and more.
It was this drive to compete that led Mark to acquire, over the years, dozens of other companies, including Instagram and WhatsApp in and There was nothing unethical or suspicious, in my view, in these moves.
One night during the summer of the Myspace sale, I remember driving home from work with Mark, back to the house we shared with several engineers and designers. I was in the passenger seat of the Infiniti S. As we turned right off Valparaiso Avenue, Mark confessed the immense pressure he felt. Facebook had gone from a project developed in our dorm room and chaotic summer houses to a serious company with lawyers and a human resources department.
We had around 50 employees, and their families relied on Facebook to put food on the table. Over a decade later, Facebook has earned the prize of domination. It is a powerful monopoly, eclipsing all of its rivals and erasing competition from the social networking category. About 70 percent of American adults use social media, and a vast majority are on Facebook products. Over two-thirds use the core site, a third use Instagram, and a fifth use WhatsApp. By contrast, fewer than a third report using Pinterest, LinkedIn or Snapchat.
What started out as lighthearted entertainment has become the primary way that people of all ages communicate online. According to the Pew Research Center , a quarter deleted their accounts from their phones, but many did so only temporarily. After all, where would they go? Facebook largely ignored the decree. The F. Mark responded by buying them, and the F. Neither Instagram nor WhatsApp had any meaningful revenue, but both were incredibly popular.
The Instagram acquisition guaranteed Facebook would preserve its dominance in photo networking, and WhatsApp gave it a new entry into mobile real-time messaging. Now, the founders of Instagram and WhatsApp have left the company after clashing with Mark over his management of their platforms.
The News Feed algorithm reportedly prioritized videos created through Facebook over videos from competitors, like YouTube and Vimeo. In , Twitter introduced a video network called Vine that featured six-second videos. That same day, Facebook blocked Vine from hosting a tool that let its users search for their Facebook friends while on the new network.
The decision hobbled Vine, which shut down four years later. Snapchat posed a different threat.
So Facebook simply copied it. At an all-hands meeting in , Mark told Facebook employees not to let their pride get in the way of giving users what they want. Investors realize that if a company gets traction, Facebook will copy its innovations, shut it down or acquire it for a relatively modest sum. So despite an extended economic expansion, increasing interest in high-tech start-ups, an explosion of venture capital and growing public distaste for Facebook, no major social networking company has been founded since the fall of As markets become more concentrated, the number of new start-up businesses declines.
This holds true in other high-tech areas dominated by single companies, like search controlled by Google and e-commerce taken over by Amazon. Meanwhile, there has been plenty of innovation in areas where there is no monopolistic domination, such as in workplace productivity Slack, Trello, Asana , urban transportation Lyft, Uber, Lime, Bird and cryptocurrency exchanges Ripple, Coinbase, Circle.
He has demonstrated nothing more nefarious than the virtuous hustle of a talented entrepreneur. Yet he has created a leviathan that crowds out entrepreneurship and restricts consumer choice. How did we allow this to happen? Since the s , courts have become increasingly hesitant to break up companies or block mergers unless consumers are paying inflated prices that would be lower in a competitive market.
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But a narrow reliance on whether or not consumers have experienced price gouging fails to take into account the full cost of market domination. And it is out of step with the history of antitrust law. Facebook is the perfect case on which to reverse course, precisely because Facebook makes its money from targeted advertising, meaning users do not pay to use the service.
I was on the original News Feed team my name is on the patent , and that product now gets billions of hours of attention and pulls in unknowable amounts of data each year. The average Facebook user spends an hour a day on the platform; Instagram users spend 53 minutes a day scrolling through pictures and videos. They create immense amounts of data — not just likes and dislikes, but how many seconds they watch a particular video — that Facebook uses to refine its targeted advertising.
Facebook also collects data from partner companies and apps, without most users knowing about it, according to testing by The Wall Street Journal. Some days, lying on the floor next to my 1-year-old son as he plays with his dinosaurs, I catch myself scrolling through Instagram, waiting to see if the next image will be more beautiful than the last. What am I doing? Facebook seeps into every corner of our lives to capture as much of our attention and data as possible and, without any alternative, we make the trade.
The vibrant marketplace that once drove Facebook and other social media companies to compete to come up with better products has virtually disappeared. It also means less accountability on issues like privacy.
Just last month, Facebook seemingly tried to bury news that it had stored tens of millions of user passwords in plain text format, which thousands of Facebook employees could see. There is no precedent for his ability to monitor, organize and even censor the conversations of two billion people. In , they enabled the spread of fringe political views and fake news, which made it easier for Russian actors to manipulate the American electorate.