What should we expect from the Facebook antitrust investigation?
Issue #9
Last week, the Federal Trade Commission (FTC) in the US sued Facebook, alleging that the company enjoys a monopoly in social media and has engaged in several years of anticompetitive behavior. The FTC's case was joined by 46 states, the District of Columbia and Guam, giving it the feel of something significant that may actually result in material actions against Facebook. The lawsuit goes into detail about the potential unwinding of Facebook's acquisitions of Instagram in 2012 and WhatsApp in 2014—meaning if the lawsuit is successful, Facebook may be forced to divest or sell off one or both of those products.
At their core, the allegations against Facebook are straightforward: the FTC and states argue that Facebook aggressively sought to eliminate competition in the social media space through these acquisitions as well as other attempted actions including trying to purchase Snapchat in 2013.
The jury is out on whether the government will be successful in its attempt to break up Facebook, and history tells us that the probability of significant actions are low. There are many barriers to reversing acquisitions after they have occurred, which require approvals from the FTC and other bodies in the first place!
So, here are some of my predictions for the antitrust investigation into Facebook:
Facebook has been busy integrating WhatsApp, Instagram and Facebook Messenger. The FTC has been investigating Facebook for around 18 months, and Facebook consolidating the platforms will make it much harder to break them apart. Call me cynical, but I think this is at least in part a pre-emptive strategy from Facebook to protect against an antitrust ruling.
Consumer welfare is generally the principle that is measured in antitrust investigations: if consumers are harmed by monopolies, usually by having to pay higher prices, it makes a stronger argument to break them up. That could be a stumbling block in this case because Facebook's services are "free." They will likely argue that their scale and business model allow them to keep their platforms free for consumers—which admittedly doesn't mesh well with the traditional consumer welfare argument. That said, there is a growing understanding of the fact that free isn't really free though, so it will be interesting to see if the idea of consumer welfare is successfully challenged in this lawsuit.
As I wrote for Forbes, there are currently very strong indicators of monopoly in the US currently, namely the consolidation of industries and an extreme concentration of wealth. I expected that one of Facebook, Apple, Google or Amazon would find themselves in the crosshairs of the FTC. Facebook is likely the target because of the general momentum against the platform—and its business model that throws privacy to the wind.
Expect to hear Facebook argue that the success of TikTok is a strong indicator of competition in the social space. TikTok's growth has exploded and it is forecasted to top 1.2B monthly active users by 2021, with much of its recent growth in the US. What Facebook won't bring up is that TikTok was reportedly spending $3 million a day on US advertising, which equates to about $1B advertising spend per year in the US. Nothing screams a level playing field more than the fact that new entrants can get in the game for a measly $1B in advertising, right?
TL;DR
Too long; didn't read. It shouldn't be a full-time job to keep up on industry news, so here is a mercifully quick summary of some other notable developments:
By now, most parents are already aware that remote learning is... challenging. And, it can be especially hard on kids who aren't comfortable being on camera. For one student, wearing her glasses during virtual class was making her feel self-conscious. Her mother, a local TV anchor made her a promise and wore her own glasses on air in a show of solidarity that ended up touching a lot of people. She shared this great advice with her viewers, "I’ve been wearing mine all week to make this point: Whatever people say or think about you is none of your business. Just be yourself, authentically and unapologetically. The rest will work itself out.”
New research from the University of Colorado Boulder suggests that fears about tech addiction are overblown. The lead author had this to say about the findings: "Are lots of people getting addicted to tech as teenagers and staying addicted as young adults? The answer from our research is "no." We found that there is only a weak relationship between early technology use and later technology use, and what we do as parents matters less than most of us believe it will." I'm still trying to decide if that's encouraging or not.
And lastly
Here are a few more pieces of original writing from me and my team—just in case you're keen for more:
As part of our interview series, we had a chance to connect with ethnomusicologist Dr. Kyra Gaunt. We discussed digital literacy and practical advice on how parents and kids can find common ground. Check it out on our blog!
I often talk about quality over quantity when it comes to judging screen activities. If you're wondering how to assess what your kids are doing online, here are some of my insights!