My paper, “The Antitrust Case Against Facebook,” details the quintessential market power fact-patterns that standard economics and competition law have made familiar. Facebook’s ability to inflict harm today on both consumers and news publishers rests heavily, though not exclusively, on a single practice that Facebook engages in: surveillance. Facebook not only tracks users while they are on its site; it also follows them after they leave Facebook itself. This singular ability to surveil customers—across millions of independent and sometimes competitive businesses—is the source of Facebook’s unusually high profit margins in digital advertising, as well as its ability to inflict harm on market participants. Facebook could not get away with this when it faced real competition.
Srinivasan’s paper is a sprightly and readable thing, but it clocks in at 80-some pages, so you may prefer her summarizing articlefor the Institute for New Economic Thinking. Either way, take note of the legal maneuvers she makes, which go even farther than Kahn did: Srinivasan makes a solid case that even the nearly useless Reagan version of antitrust law can be stretched to fit Facebook, in light of the case she lays out.
Srinivasan’s history of Facebook’s surveillance rollout makes link between monopoly and surveillance clear. For its first ten years, Facebook sold itself as the pro-privacy alternative to systems like Myspace, Orkut, and other competitors, repeatedly promising that it wouldn’t track or analyze its users activity. As each of Facebook’s competitors disappeared, Facebook advanced its surveillance technology, often running up against user resistance. But as the number Facebook alternatives could go declined — because Facebook crushed them or bought them — Facebook’s surveillance became more aggressive. Today, with Facebook as the sole dominant social network, people who leave Facebook end up joining Instagram, a Facebook subsidiary.
I really like Adobe as a company, but I think their suite has become so costly and unavoidable for the average creative consumer that they need to be a little bit smaller, so as to allow smaller players to compete without feeling like they have to go up against an impossible behemoth to even make a dent. Maybe Adobe fans won’t like to hear this, but I swear my case here is for the creative community’s best interests.
Adobe is increasingly not only trying to run the software that can create your flyer or logo or commercial, but it’s trying to own the whole marketing process, too, soup to nuts. Some companies might love that sort of integration, and it’s a big reason why Adobe is making all these aggressive acquisitions. But a single company with that much power over a single field is worrying.
“Start by breaking off WhatsApp and Instagram.”
Antitrust has never been just about costs and benefits or fairness. It’s never been about whether we love the monopolist. People loved Standard Oil a century ago, and Microsoft in the 1990s, just as they love Google today.
Rather, antitrust has always been about progress. Antitrust prosecutions are part of how technology grows. Antitrust laws ultimately aren’t about justice, as if success were something to be condemned; instead, they are a tool that society uses to help start-ups build on a monopolist’s breakthroughs without, in the process, being crushed by the monopolist. And then, if those start-ups prosper and make discoveries of their own, they eventually become monopolies themselves, and the cycle starts anew. If Microsoft had crushed Google two decades ago, no one would have noticed. Today we would happily be using Bing, unaware that a better alternative once existed. Instead, we’re lucky a quixotic antitrust lawsuit helped to stop that from happening. We’re lucky that antitrust lawyers unintentionally guaranteed that Google would thrive.
He uses the case of the vertical search site, Foundem.com, to demonstrate the way in which Google kills competition by removing them from searches.
In 2006, Google instituted a shift in its search algorithm, known as the Big Daddy update, which penalized websites with large numbers of subpages but few inbound links. A few years later, another shift, known as Panda, penalized sites that copied text from other websites. When adjustments like these occurred, Google explained to users, they were aimed at combating “individuals or systems seeking to ‘game’ our systems in order to appear higher in search results — using low-quality ‘content farms,’ hidden text and other deceptive practices.”
Left unsaid was that Google itself generates millions of new subpages without inbound links each day, a fresh page each time someone performs a search. And each of those subpages is filled with text copied from other sites. By programming its search engine to ignore other sites doing the same thing that Google was doing, critics say, the company had made it nearly impossible for competing vertical-search engines, like Foundem, to show up high in Google’s results.
Rather than living off their innovation, Adam and Shivaun Raff have spent the last twelve years campaigning against Google. Supported by Gary Reback, they took their case to European Commission in Brussels.
Reback had told Adam and Shivaun that it was important for them to keep up their fight, no matter the setbacks, and as evidence he pointed to the Microsoft trial. Anyone who said that the 1990s prosecution of Microsoft didn’t accomplish anything — that it was companies like Google, rather than government lawyers, that humbled Microsoft — didn’t know what they were talking about, Reback said. In fact, he argued, the opposite was true: The antitrust attacks on Microsoft made all the difference. Condemning Microsoft as a monopoly is why Google exists today, he said.
If such changes and challenges is dependent on individuals such as the Raff’s standing up, it makes you wondering how many just throw it all in. Cory Doctorow captures this scenario in his novel, The Makers.