First of all, on human timescales (i.e. lifetimes) monopolies can be very long lived. The Standard Oil Trust was very destructive for decades, and though it might have collapsed due to natural causes, that destruction could have lasted for decades more. Which leads to the second problem: those long periods of stagnation are multiply destructive: not only do the victims pay a premium (which they could have spent on other goods), the monopoly's existence retards innovation.
The final irony in the case of Standard Oil is that is was worth more to John D Rockefeller after being broken up than it was when integrated. The government did everyone a service by breaking it up.
"In 1904, Standard controlled 91 percent of production and 85 percent of final sales. Most of its output was kerosene, of which 55 percent was exported around the world. After 1900 it did not try to force competitors out of business by underpricing them... Due to competition from other firms, their market share had gradually eroded to 70 percent by 1906 which was the year when the antitrust case was filed against Standard, and down to 64 percent by 1911 when Standard was ordered broken up"
sounds like if you stop trying to compete other companies will
The Sherman Antitrust Act was passed in 1890 but it was a toothless tiger until Roosevelt assumed the office of president in 1901. Prior to then, the main case involving the act was successful in using it against labor unions. Following 1901, litigation broke up a number of companies. This is important.
Investigation at the time indicated that Standard Oil employed predatory pricing up until 1900. Following 1900, they resorted to a shell-game to obfuscate what was going on.
Amongst the first wave of anti-trust litigation targets were J.P. Morgan's holdings. He was cornering the railroad and steel industries successfully, the biggest coup being the formation of US Steel in 1901. The other crown jewel in the strategy was oil, namely Standard Oil, which operated synergistically with J.P. Morgan's holdings in rail and steel. During this time, we had characters like Elbert H. Gary, CEO of US Steel, who held cross-industry dinners aimed at setting uniform pricing for steel and providing management across businesses with consolidated positions against labour organization. While it had been growing at a steady clip beforehand, Standard Oil's value began to skyrocket as of 1901 with no real change in its core business practices.
The SCOTUS' exposition of the issue does a great job showing how Oil's monopoly was mediated in large part through Rail (the case also indicates that practices wrt pipelines were analogous to rail):
"the bill alleged that the combination and its members obtained large preferential rates and rebates in many and devious ways over their competitors from various railroad companies, and that by means of the advantage thus obtained many, if not virtually all, competitors were forced either to become members of the combination or were driven out of business"
Can't transport oil if you don't have rail cars. Can't build rail cars or rail if you can't make steel, and you can't run your trains or your steel plants without oil.
In 1902, the Roosevelt directed the AG to commence litigation to break-up of the J.P. Morgan headed railroad trust - Northern Securities Company. This matter was such a high priority that the case was resolved and reported through all levels of appeal in 1904. As a side note, this is mind-bendingly fast for competition litigation, even today.
With the threat of anti-trust litigation preventing outright predatory pricing and "competitive" rail back on the table steel and oil began to lose their moats. But "competitive" rail wasn't very competitive, and continued a legacy of providing obfuscated sweetheart deals to Standard. They got broken up 7 years later as a result. By the time steel's litigation hit in 1920, it had proper competition and did not get broken up.
Rockefeller paid ransom sums for decades to buy out competitors (most of which were junk operators at best) to keep them from tanking the price of oil by dumping new strikes onto the market (a very frequent occurrence). His entire goal was oriented at market share + stability. The history of oil prices back then, was truly horrific, it was a constant boom and bust cycle that tortured most companies in the oil sector. Once Standard Oil accumulated enough of the market, including distribution (not as often talked about, they overwhelmingly controlled distribution), it could heavily control market pricing without having to own all the market. Their dominance in distribution is arguably the single most important thing they accomplished after the refining consolidation. With that gatekeeper status, they were able to demand other firms they didn't own adhere to their pricing levels, or have their distribution access cut off. In that way, they figured out how to stabilize the market pricing, without having to continue to own ~90% of the refining market.
Standard Oil was a monopoly for over 20 years. There are countless monopolies that have gone on that long or longer, only to be broken up by government eventually.
I love the free market, but between regulatory capture, legal costs, and aggressive pricing structures, monopolies can be absolutely unbeatable within the career lifetime of any person.
No one except Zuckerberg, I'd think.
However, it raises an interesting question: how exactly would you break up an entity like facebook? It doesn't seem like a business that would lend itself to subdivision.
Then mandate interoperability with an open standard, like a phone network.
I don't think that makes much sense for breaking up something like Facebook.
Unlike a phone network, Facebook's service is not rooted in geography. Yes, it's users have homes and geographic locations, but those are just arbitrary account attributes, just like their name or if they like the Denver Broncos. You might as well have one post-breakup company start out with all the A-M accounts and the other the N-Z accounts.
If you had to divide up the users between N successor companies, I'd probably be best to do it based on friend-graph connectivity, with mandated interoperability between them. That might make the successors sticky enough to survive.
So your premise is true(ish), but the conclusion can't be drawn from it (and your comparison falls apart) because we don't need strict dependency on geography, only a (relatively strong) correlation.
That way each competitor could offer its own interface and algorithm for filtering people's feeds, and show their own ads (or offer a competing business model). If users opted to have their posts on the competing site automatically sent to Facebook (so their Facebook-only friends could still see them) then Facebook would be free to data-mine those posts still.
The next question is, could someone code a browser extension or other tool which makes this possible without needing any changes from Facebook's side? If it would break the Facebook terms of service, would someone crowd-fund the anti-trust lawsuit to override those terms?
Hell, the main benefit I see to instagram is that their geotagging improved immensely.
Network effects. Together everyone hates it; individually, there is nowhere else for people to go without losing the majority of your social network. Facebook has people; its software is utterly irrelevant to why people use it.
But it seems many aspects of capitalism lend themselves to winner take all mechanics, resulting in large companies (airliners and telecoms and entertainment companies) constantly merging and reducing competition. So without the FTC, we might have even more monopolies. Without these laws, Microsoft would be the only PC company (MS bailed apple out to keep some "competition" around) and Intel would be the only manufacturer of CPUs (likewise for Intel and AMD).
"Natural monopolies arise where the largest supplier in an industry, often the first supplier in a market, has an overwhelming cost advantage over other actual or potential competitors; this tends to be the case in industries where fixed costs predominate, creating economies of scale that are large in relation to the size of the market, as is the case in water and electricity services. The fixed cost of constructing a competing transmission network is so high, and the marginal cost of transmission for the incumbent so low, that it effectively bars potential competitors from the monopolist's market, acting as an early insurmountable barrier to entry into the market place."
There's a good argument to be made here they all software sub-markets are natural monopolies.
But we'll never know, since nobody else can reasonably enter the market.
John Maynard Keynes
EDIT: And downvotes, too? I've been insulted, and I don't take kindly too it, yet I deserve to be downvoted? Thats ridiculous.
I don't have faith that the free market will solve any problem well if we just wait long enough though. Nor do I believe that it's wise to just sit around and refuse to fight injustice because the problem might solve itself out in 50 years.
In this specific case, I think the network effect of social networks (ie it only makes sense to use a given social network if the people you want to communicate with use it as well) is so strong that the unregulated free market is not a good model to solve that problem.
en.wikipedia.org/wiki/Facebook,_Inc._v._Power_Ventures,_Inc.
There was no scenario under which the electric car was going to take off until lithium batteries were radically cheaper and available at truly massive scale. Mass market consumers do not want to drive EVs that get 50 or 80 mpg equivalent and cost $50,000.
Tesla came along only when it was finally becoming possible to do a nice EV thanks to falling lithium battery prices, at a low enough price point that well off consumers could afford them. The rest is history.
Could you explain a little more? I have not heard any credible evidence to support this theory.
The current understanding of US antitrust laws is similar. The Justice Department pursues antitrust actions only if the end consumer is being hurt.