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article imageOp-Ed: Antitrust laws have more to prove than Facebook has

By Paul Wallis     Jul 25, 2019 in Business
Menlo Park - Recent announcements that the FTC is investigating Facebook for antitrust issues, notably possible damage to competition, are far from straightforward. The question is now whether antitrust law can make a case against Facebook.
The FTC investigation is currently looking for information on “social media dynamics” to assess Facebook, but the investigation has its own issues:
1. A range of piece-of-string issues like “restricting innovation and output” which could be interpreted in any number of ways, self-serving or otherwise.
2. Another subject for investigation is “harm to competition”. Again the definition of “harm” is subject to interpretation. Meanwhile - Who are Facebook’s competitors? Social media tends to have very different user bases. Reddit is a social site, but you could hardly call it a Facebook competitor, for example, in any business context.
3. Does denial of access to Facebook for some apps really constitute an antitrust issue? Not necessarily. Restricting or denying a social media platform’s right to decide what access it provides would seem almost absurd. How many businesses MUST provide unrestricted access to their services?
The bigger picture needs clarifying
One of the problems for Facebook is its sheer size and scope of operations. The rise of the mega-corporations is blurring the issues. Companies of this size can’t operate the same way as old-style corporations.
You can easily argue that companies like Facebook Google, Microsoft and Apple are innovation drivers, rather than restricting innovation. They have the capital and knowledge to fund and direct real, practical innovation like few other corporations. Facebook is itself the direct result of a critical, world-changing, innovation.
One of the reasons for the lack of Easy Bake competitive model comparisons is that every social media platform is so different. Twitter is a social media site, and totally different to Facebook. LinkedIn is a social media site, in another, totally different market.
Are antitrust laws out of date? Yes, to a considerable degree.
We’re not talking about direct competition like McDonald's and Burger King when it comes to social media on a global scale. Antitrust laws exist to protect against business malpractice, but these laws were designed for a very different legal and business environment.
For example, the legal theory of a monopoly is very simple. A monopoly is considered to be a dominant force in the market which basically eliminates competition.
Does that really apply to Facebook? Do people have no other source of social media? Facebook is huge, it is perceived as dominant, but its source of revenue and operations are all platform-specific. The rest of the world is literally a click away. Facebook isn’t an unavoidable bottleneck in conduct of social users, business, revenue, or anything else.
Is Facebook the only place to advertise online? Does every business on Earth have other places and multiple forms of market targeting beyond Facebook?
You get the picture. “Big” doesn’t mean monopoly. It means popular. It means a good place to market. By no stretch of any range of numbers, however, can it be called a monopoly in the sense meant by the antitrust concept of an unavoidable, market-dictating entity. It’s simply not true, and can’t even be pretended to be true.
The right to manage a business
One of the cases cited of Facebook damaging competition is an indicator of a lot of basic misreading of Facebook’s business. This was the Vine video app, to which Facebook decided to restrict access. This is the classic case, in fact, used to prove Facebook’s alleged harm to competition. Well, is it? Has anyone noticed that Facebook rather obviously hasn’t restricted access for other video apps? It’s not like they’re actually enforcing a “thou shalt have no other video apps than ours” environment. There’s no blanket restriction in place.
The theory that Vine is some sort of antitrust issue is also based on a remarkable bit of logic: Vine was owned by Twitter, a Facebook “competitor” as though the two sites weren’t very obviously total different platforms.
The antitrust logic, however, goes truly haywire in this case:
1. Vine posts on Facebook naturally lead back to Vine/Twitter.
2. Therefore, the theory is that a global social media platform like Twitter has to rely on a competitor, Facebook for market access? How in the name of tedious press releases could that possibly work?
3. Is it seriously being suggested that Twitter couldn’t run its own video apps on its own site or others? Vine is arguably the most absurd possible example of any antitrust issues imaginable.
So - Does Facebook have the right to decide which apps it allows on its own platform? Yes, it does, for some surprisingly practical reasons:
• Would you, as a business owner, allow any old thing, of whatever quality and actual value, on your site, purely on principle? Wouldn’t you do a bit of quality control, and make a call, Yes or No?
• Are you in any way legally obliged to accept any app of any kind for use on your platform? No, of course not.
• Is there any statute in force that says you must accept working apps on any website for any reason? No, and there never have been.
• Does it make any business sense whatsoever to simply load up the platform with whatever passing apps happen to be around? I ask because antitrust laws can apparently be interpreted that way, and that interpretation has a lot of negative implications for the entire internet.
The antitrust case against Facebook has more to prove than Facebook has. If the antitrust laws are to be so widely spread, at what point are business realities considered?
The Federal Trade Commission Act is intended to manage unfair competition, not the conduct of basic business. The question is therefore to whom is Facebook unfair? The answer to that question may need to explain itself much more than Facebook will.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
More about FTC vs Facebook, FTC Act, Vine app on Facebook, social media competition and antitrust laws, conduct of business in social media platforms
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