Setting The Record Straight: Anti-Facebook Campaign Is “Misguided Political Fervor That Ignores The Economic Facts”
This week, tech critics launched a six-figure ad campaign against Facebook’s supposed monopoly. The Open Markets Institute, who has previously called for the break up of various other successful firms, announced their campaign by purchasing ads on competitors to Facebook’s “monopoly,” which Axios has noted are “running on Facebook and Instagram, as well as Twitter and more traditional display ad slots.” As CCIA’s Ed Black said yesterday:
“The call to break up this highly competitive company is misguided political fervor that ignores the economic facts, lacks evidence of competitive harm, and proposes an extreme resolution that would harm consumers and reduce innovation.”
A few facts missing from this campaign:
Consumers are benefiting from unprecedented competition and are able to exercise their choices thanks to low switching costs.
—Across the globe, Global Web Index finds people have eight different social media accounts on average, echoing a Pew Research Center analysis finding the typical American multi-homes on at least three different platforms a day.
—USA Today reported earlier this year, “Facebook is losing young users at an even faster clip to Snapchat than previously forecast, according to new research from eMarketer.”
—More broadly, Facebook competes with other tech leaders across 27 different categories, according to economist David Evans.
Successful technology firms including Facebook provide exceptional consumer value to consumers and economic value to the nation.
—Recent research reported by The Economist reveals that the average consumer attaches thousands of dollars in value to free-to-the-user Internet services, and create millions in consumer surplus each year.
—As antitrust law professor Herbert Hovenkamp has noted, large firms also create economic value because they “historically pay higher wages and salaries than smaller firms.” Consequently, “breaking up large firms may reduce rather than increase employment, and may force wages lower.”
—The tech sector leads the country in R&D investment and the Department of Commerce analysis found from 2006 to 2016, real value added for the digital economy outpaced overall growth in the economy each year and mitigated the downturn in GDP during the recession in 2008 and 2009.” Employment growth in the digital economy has additionally outpaced overall employment growth, with respective rates of 3.7 percent yearly compared to 1.7 percent.
Facebook is just one competitor in the dynamic global advertising market.
—Advertising is a $535 billion industry, and digital and mobile advertising — which competes with offline options including with large cable companies — make up less than half of global advertising revenues.
—Recent evidence – analysts predict that Twitter and Snap will continue to grow at Facebook’s expense. eMarketer predicts Google and Facebook will lose digital ad market share this year. And new entrants like the Vox Media’s Quartz-Concert partnership, “Concert C-Suite,” which takes the ad traffic from Vox and NBCUniversal to create a collective ad inventory, continue to encroach on leading tech services’ share of the digital ad space.
Antitrust tools are not the correct means to address privacy concerns.
—Bloomberg View columnist Noah Smith notes, “The problem isn’t the size of the company that has your data, it’s what the company chooses to do with that data. It seems quite possible that fragmentation of Big Tech would result in people using more data-gathering online services overall, which would only increase the number of companies with the ability and the incentive to sell their personal data.”
—The Wall Street Journal’s Holman Jenkins recently noted, “Antitrust is not a solution for the privacy and fake news problems that come with social media. And neither is antitrust called for on traditional monopoly grounds.”