FTC Sues Facebook for Illegal Monopolization
ftc.gov
ftc.gov
https://news.ycombinator.com/item?id=25363366&p=2
https://news.ycombinator.com/item?id=25363366&p=3
(This message will eventually self-destruct.)
[1] https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
i wonder if they're constrained because their staff can't maintain the codebase well in the nonstandard arc language, and pg obviously has retired
Edit: reasonably good.
Dang, please do not change the UI.
I don't think this extremely minor issue warrants cluttering the UI with additional "page 1 2 3 ..." links at the top.
No its not atleast for me. I just miss it and looks like lot of others miss it as well.
Pages: 1 | 2 | 3 | 4 | 5 > End
or similar...
Located directly below the add comment button.
If I know anything about software, it's been in HN's issue tracker for years.
https://news.ycombinator.com/item?id=25087113
https://news.ycombinator.com/item?id=25065663
https://news.ycombinator.com/item?id=24042165
If you guys complain enough about these comments at the top of the threads, it might actually get me to finish the damn performance improvements so I guess keep complaining.
I only see the API available, not any of the front-end: https://github.com/HackerNews
Laying out laws and regulations so the market works as intended (no doubt with adjustments on the way) seems like the far preferable way to ensure healthy competition than taking a hammer to the job site and hoping for the best.
That's what antitrust/monopoly laws do.
If FB is doing anti-competitive things than disruption is needed. It's not meant to be comfortable.
Companies are really good at learning the playing field and then gaming it for their benefits. Tweaks to laws are often easy to work around. Disruption that stops an illegal monopoly is going to be uncomfortable. Especially at first.
But, it opens the door for the future in ways that aren't options today.
Absolutely. The same could also be said of the closest parallel of Facebook in history, the Bell System.
No, seriously, modern tech companies are an anti-trust challenge that was not truely forseen in existing anti-trust laws. That governments are now trying to find answers is a good thing.
How is the market going to fix that?
Isn't this also true for Facebook itself as related to how dependent they are on revenue and at what cost that comes to the users who help generate it (by being presented as "eyeballs" to the advertisers)?
We used to let kids play with dry cleaning bags, until we discovered they were idiots and can suffocate on them.
The realization today is that parents were the actual idiots, not the kids.
This organization itself is disruptive. As interesting as it is to discuss the potential costs and benefits, there's been a very real cost to society for these issues. It makes no sense to wait for further damage reports if that's at the cost of further damage. It's simple cost vs benefits really. Also I thought disruption was a good thing..?
Downvoted so I'll just add one more thing; this isn't a conversation that is new. I'm coming to this with that context. Do I want them to fail? No. The desired outcome is that they will self regulate. But if not, there should be competition. Monopolies naturally have negative side effects, that's why we try to avoid them.
If what's being said is that those investments are important and necessary, then we should be looking for reasons to sustain them that aren't just about validating the continued existence of a monopoly.
The Facebook purchases of WhatsApp and Instagram were not innovative and should have triggered antitrust at the time. There is no healthy competition when you buy Any worthy competitors.
Besides... they will get to sell it, probably at a profit. They got to own it for 8 years, enjoyed the benefits of lowered competition. They will be fine. I agree that this should have been prevented in the first place, but we are where we are.
Controversially, I don't think ordinary rule of law can apply to FAANG-scale monopolies. There's no way to generalize rules, laws or industrial policies when the industry is "social media." Social media is (economically) mostly FB. Any rule, law or policy is basically regulating FB specifically.
Anyway, the danger of a hammer coming out is low. Even if prosecutors succeed, a cost-of-business fine is the most likely result. Even if they do spin out whatsapp & IG... that leaves facebook mostly intact.
I'd also note that the worst case scenario for overzealous trustbusting is basically nothing. At worst you kill FB. This isn't steel production or auto manufacturing. FB could be swallowed by a demon tomorrow and by next thursday any shortage in social media will be filled. We're not exactly short on the stuff.
FB bring in $80bn pa, but that's totally arbitrary to the cost of doing social networking. It could be done for $40bn or $8bn and I doubt the consumer would notice a difference. Again, this isn't auto manufacturing. A car company can't make as many cars with half the revenue. If one dies, we actually have less manufacturing capacity and we'll make fewer cars for a while. None of this applies to social media.
In the last paragraph, I was trying illustrate a point. With monopolies of the past, the primary concern was that the services continue to operate somehow. EG, when Bell was broken up, the danger was that phone/telegram services would be harmed. Before that, the danger was that steel production would be disrupted and downstream industries harmed.
Facebook is a monopoly in a marketplace of extreme abundance. We have lots of social media, messaging, photo sharing, etc. There is zero danger of shortages or meaningful "consumer harm," regardless of what happens to FB.
Even if antitrust does harm FB, the only stakeholders at risk are FB employees and investors. There is no systemic risk, downstream risk, consumer risk. All the risk is contained within FB.
This doesn't mean FB should be killed. It does mean that the scale tips strongly towards antitrust. On one side, we have a lot of risk. On the other, very little.
In short, their implementation allows to change the encryption keys of users without their consent to arbitrary, known keys. The protocol won't re-encrypt sent messages, but there is nothing in the protocol forcing the app to show a notification that your encryption key has changed, which amounts to a man-in-the-middle attack. Any subsequent messages sent or received using that encryption key will be exposed to the attacker.
Encryption keys are managed on servers controlled by WhatsApp.
Did you click through the link at all?
It's curious that you are using a new account with a gibberish name to make all these claims.
Disclaimer: I personally know nothing about beyond the posts in this thread.
No password access, login through SMS which can be intercepted, no 2FA, no access from another device while you phone is dead, compresses video to 2 pixels, no real crypto auth to speak of.
It does not seem to have any features that are better than Signal, telegram, messenger, or a dozen other apps. Why is it worth any awards or special consideration, besides being popular?
You're not wrong about any of this, but that final phrase weighs far more for most people than anything else. It is a communications app after all, and is only useful if there are people to communicate with.
But it was pretty good before they bought it, too. And widely used, IIRC was clearly the biggest in some parts of the world.
End-to-end encryption in a proprietary app is a joke. "Please trust us we encrypt your messages".
I posted this elsewhere but I think Ben Thompson gives a very deep analysis of the issues in the competitive landscape here:
https://stratechery.com/2017/manifestos-and-monopolies/
The summary would be something like "any acquisition of a social network by another social network is necessarily anticompetitive and should be banned, or at least have the presumption of being illegal".
The only way that there can be a true competitor to Facebook is for a smaller social network like Instagram, or WhatsApp, or TikTok, to not get acquired and to grow until their userbase is bigger.
Zuckerberg understands this well; you can read his emails where he openly admits that buying Instagram is about preempting a competitor:
https://www.theverge.com/2020/7/29/21345723/facebook-instagr...
The money quote from Zuckerberg:
"There are network effects around social products and a finite number of different social mechanics to invent. Once someone wins at a specific mechanic, it’s difficult for others to supplant them without doing something different.”
“One way of looking at this is that what we’re really buying is time. Even if some new competitors springs up, buying Instagram, Path, Foursquare, etc now will give us a year or more to integrate their dynamics before anyone can get close to their scale again. Within that time, if we incorporate the social mechanics they were using, those new products won’t get much traction since we’ll already have their mechanics deployed at scale.”
I think you can apply the same argument to WhatsApp; by purchasing a rival social network, they prevent it from being a competitive threat.
Now their tracking pixels can't see you.
Any ideas where to go for similar functionality that will be supported in the future?
I agree that tech is the wrong place to be solving this problem, but it can work in a rather cludgy way.
Facebook either buys or crushes all competition which doesn't have billions of dollars to push back.
Since the function of the government should be ensuring the best outcome for the majority of the population and what facebook does makes things worse for the majority, it makes sense to take action here.
Unencumbered API access to the social graph is exactly what led to the Cambridge Analytica scandal, and promising to restrict API access was part of Facebook's settlement with the FTC.
I think a case could be made that knowledge that <A friend B> belongs to A and B equally and that neither has standing to preclude the other from sharing that fact. Of course they could both mutually agree to such an arrangement ahead of time, but outside of such an agreement, I have a hard time seeing the case for "B prevents A from telling C that A and B are friends".
Another aspect of this though, is "how much can A tell C about B without permission from B?" We know that IRL, people do get angry when friends reveal overly personal details about their lives to others, so this is definitely something to consider.
I'm not sure how you got that from what I said above. Obviously there are such things. But I do think it's an open question to what extent we can compel our friends to keep things private. Of course if someone is really a "friend" you would expect them to keep confidences if requested... that's part of the definition of "friend" in my mind.
Agreed. And I am not arguing that it is, or should be. But the mere fact that two people are friends seems to me, at first blush, to be something that normally either person would be free to share.
> To further strengthen the control over his or her own data, where the processing of personal data is carried out by automated means, the data subject should also be allowed to receive personal data concerning him or her which he or she has provided to a controller in a structured, commonly used, machine-readable and interoperable format, and to transmit it to another controller.
The problem is that if I export my social graph and share it with another company, it includes information about who my friends are -- at the very least, it shows that they are my friends. That violates their privacy. Maybe they did not want their relationship with me to be known outside the social network where they established it.
Example, you are chatting at a party with someone and they ask you if you know Bob since he works at your company. You say yes and you say you are good friends with him. You violated Bob's privacy here?
If the question were framed more like:
"Do you consent to sharing your entire address book, so that we can better market to you and your friends and offer targeted ads based on that data to our real customers?"
Would most people actually answer yes?
Presumably you would be granting this system access to this information.
>Would most people actually answer yes?
some people would, do they not have that option?
Multiparty secure computation is one possible way. There are a few, emerging implementations.
If we're not okay with other companies having access then why is it okay for a single company to have that access? Do you know and trust every facebook employee including those that don't work there yet with your data? Do you trust that that data will be securely handled when the company is sold after declaring bankruptcy?
I think your objection is an accidental straw-man. I don't think it was intentionally made, it is a valid thought to ponder but it should exist independent of the question of sharing data.
Should Facebook have all the info your bank has for instance? Or auto mechanic, your realtor? This is a slippery slope of logic of shared data for all leads to.
Some of these "social graph" features will do things like link two people as friend suggestions if they both have your phone number in their contacts book, even if you haven't consented to Facebook building up some information about you.
This doesn't sound like willing access & knowledge of what information you provide to Facebook.
PS by fighting this point you’re merely pointing out that giving more businesses this data isn’t a good idea
It doesn't have to run on companies spying on their users either.
Sam Walton of Walmart would record everything about his competitors legally and illegally as well as clients yet you never see that in the news, why? Because it’s not sexy, it’s not about the internet.
This is why Equifax which was a much more horrible data breach isn’t thought about, yet everyone gets their panties in a bunch about Facebook
The ironic beauty in that would be awesome. Also, I'd kind of like to get it about myself for similar reasons :)
They had no real idea what else it would or is being used for.
They have to monetize and I approve.
Hell I’m willing to bet if Facebook puts into their agreement that every photo you upload to their platform is partially owned by them then people will still upload photos.
It’s not the data that we find valuable, it’s the connections they make or will make, and to this company. Next time you take a photo and find it’s shared with not just Facebook but a whole slew of other companies you tell me if that’s the right thing to do.
The person above said “do you trust all Facebook employees” well you can make that blanket argument for every company in existence and giving more companies our data isn’t a good solution
I mean Facebook might perform facial recognition on your photos and infer connections to other people you didn’t explicitly tell them about.
I mean that facebook might track your location and app launches and identify where you go on vacation and when you shop.
These are the kinds of thing nobody gave consent for.
The consent thing can both be good and bad, just like the invention of the internet and electricity before that. I’m trying to make that point that giving away your data is gonna be a commodity once everyone realizes they’re not a special snowflake
The difference is that Disney grants license to its content after (potentially drawn out) negotiations and payments, while the typical Facebook users "Agrees and accepts to grant Facebook a worldwide license"
BTW it doesn't confer a license (mostly) to anybody else but normal users do not sue.
Facebook builds shadow profiles on non-users and then fills them out with, amongst other things, data it gets from their actual users that they didn't no they were sharing.
This is particularly sneaky when Facebook has used dark patterns to trick app users into granting them permissions they don't strictly need for service.
Check out LiveRamp for example; they literally scan in physical documents like car mechanic paperwork (seriously) and dropship them into S3 buckets to huge data brokers every day.
Take that and merge it with facebook’s social graph, how many ms you look at a photo on Instagram and how long you take to reply to someone on WeChat, and you have an awful lot to work with.
What difference does that make? Facebook almost certainly knows my banking information, without me giving it directly to them
Privacy is in the process of becoming antiquated. It is sad, but I think it is inevitable. Surveillance technology advances with technology in general, and counter-surveillance becomes more and more cumbersome. Eventually, we will reach a point where anyone can afford tiny stealth drones to watch what is happening in their neighbors' houses. The counter-measures necessary - hermetically sealed living space, faraday cage enclosure - are so burdensome that only people who currently live in bunkers will implement them for their living spaces.
If we accept that premise, let's think about what we are losing. In my understanding, there are two main reasons why privacy is so important:
1) Allowing individuals to avoid becoming targets of persecution for having some attribute. Targeting by oppressive governments for holding idea X, targeting by an evil megacorp for threatening to disrupt industry Y, etc.
2) Allowing individuals to avoid social stigmatization and shame for having some attribute. Getting caught eating one's boogers, viewing porn of people dressed up as pieces of furniture, etc.
For point 1, I think the real issue is imbalance of information. Schemes to abuse access to someones previously private information mostly wouldn't stand up to public scrutiny themselves. Unless, of course, you have some ultra-powerful organization like a well run totalitarian regime, in which case individuals by definition have no privacy rights anyways.
For point 2, I think shrinking privacy will seriously reduce the social response to this kind of information. "So what if I watch porn of people dressed up as furniture; you masturbate while dipping your toes in peanut butter! That's way weirder!" Sure, there are plenty of painfully normal people out there, but I think most shameful weirdness would become commonplace when the full extent of weirdness is out in the open.
All that being said, I do think anonymity is important, and can probably be preserved, as it is distinct from privately acting in physical space, or online while tied to some form of identity. Also, I don't want to argue against efforts to preserve and advance privacy for individuals for as long as possible. I just think that per point 1, we might want to devote effort to reducing the privacy of organizations to try to maintain parity of information access as our individual privacy slips away.
> The counter-measures necessary - hermetically sealed living space, faraday cage enclosure - are so burdensome that only people who currently live in bunkers will implement them for their living spaces.
There are a lot of situations we forbid activity that is difficult to prevent (and sometimes difficult to detect).
Whether trying to use the law to deter here is worthwhile, meaningless, or harmful isn't necessarily clear - but it deserves consideration in addition to outright prevention.
It definitely somehow limits their use, but anybody really interested is able to obtain them illegally, or produce them themselves.
I'm afraid the same will be true about micro-drones or whatever else the post suggests.
It's different from drugs in that one of the participants is unwilling, though I don't know whether that's a big enough difference - particularly given that that participant is also unwitting.
I'd say it's not ok, but people keep on giving Facebook all that information (and it's very tempting to do so). There are technical solutions which anonymize/privatize social network information, and then no entity has such access.
You can only briefly see which friends have also already signed up.
Perhaps a "social graph" shouldn't belong to any company. The concept itself might be anti-privacy.
Perhaps it's time to move back to simpler things like OPML. (Which people seem more comfortable sharing freely - not sure if that's still a "social graph" tho.)
Perhaps specific relationship details shouldn't be housed in the social network - just the permission to follow.
Perhaps companies who house a "social graph" should be regulated - similar to what is done with medical data. It should be a toxic substance.
I just think we're a long way from doing this right and there are a lot of untried options - and I lack imagination as well.
Good riddance to them.
Which one is propaganda? The one you disagree with? The one that doesn't fit with your preconceived notions? The one that doesn't fit with your personality profile? Both positions? Neither position? Do we just shut down all thinking on the internet? Who watches the watchers?
> In the 20th century, the term propaganda was often associated with a manipulative approach, but historically, propaganda has been a neutral descriptive term.[1][2]
Letting people be mislead about vaccines harms people, letting people get brainwashed into mistrusting the legitimacy of their institutions harms people, letting people use their platform to incite genocide harms people.
They actually have metric to measure those things, it’s just that they prefer to dial down the heat, not kill it. It’s just too good for engagement.
Don’t “both sides” death and misery. It’s not a philosophy debate.
To be fair they are clearly fighting a delicate balance of censorship and community moderation. It's different from say a forum of yesteryear, because a forum can have a clear set of community values that should work for everyone.
Facebook and all social media is a single platform for many communities, and so given the new role of moderator they are in the impossible position of making a set of community values that apply to all communities.
I think the reason a lot of material isn't outright banned where you or I would see obvious misinformation or hate is because of this.
I urge anyone here to define metrics for harm reduction that are operationable.
If you get any far with that, then tell me how you feel if the tools that will achieve these operational metrics were inverted in their purpose.
I’m surprised they don’t go after it as a violation of their terms of service.
Also, not asking right wing “news” orgs to be fact checkers or having GOP operatives override content policy team decisions regarding misleading stories that were reported by users would be another great way to reduce “propaganda”.
It’s not a technically unsolvable problem, it’s just one Facebook doesn’t want to solve. Don’t give them a free pass.
They are a multi billion dollar company, they have the all the ressources they need if they cared.
I'm not defending VK — it does some increasingly user-hostile stuff too after having been acquired by Mail.Ru Group — but you can still integrate it into whatever the hell you want with ease.
How would you know?
The worst thing to ever happen with that open data was that some debt collection agencies used it to threaten people and their friends, and I believe that's why those service tokens were introduced. And that story was rather widely publicized: https://www.the-village.ru/business/finance/217569-banki-pis... for example.
https://towardsdatascience.com/steeling-faces-for-investigat...
https://nakedsecurity.sophos.com/2016/05/02/facial-recogniti...
So while I value privacy, I'm not sympathetic to using privacy as an argument to restrict your own access to your Facebook data, for you to decide yourself on how that's shared. If you misuse your view of your friends' data, that's on you and up to your friends to punish/discourage you for.
Your sharing your FB friends data with third parties, could be seen by the friends as impolite or even hostile. It's a matter of trust between friends, not technical ability.
Facebook itself is a third party.
The point is to move toward standards around social data and then force the big tech companies to allow each user to export their own data, quickly, in these interoperable formats.
The counter-argument to this is having the government provide the graph and an API to allow networks like Facebook connect to it. This should rightly terrify just about everybody.
I like the concept Diaspora had back in the day, it just wasn't workable really as your mum/aunt/non-tech friend wouldn't be able to understand how something like that works and would ultimately lose/delete/corrupt their tokens.
If the API is open and there's forced interoperability, the client device can call the service's API directly with the user's own credentials. No need for a third-party middleman, so no need to give a third-party access to the data.
It can work the same way IM applications like Pidgin work: one app, multiple accounts.
Why? If they shared it with me, that should mean they trust me to decide to whom I delegate the access no? I could as well just screenshot it and post it to twitter, what does make the social graph so special?
There is risk, but saying that users can’t be trusted with an API to their own social graph seems to be throwing the baby out with the bath water.
[0] https://www.healthit.gov/topic/health-it-initiatives/blue-bu...
These are not the creations of Facebook or Google, any more than Anemometer (1) manufacturers should own the shipping forecast.
(1) The spinney half-ball things that measure wind speed.
the main economic value of it is to serve ads on Facebook dot com. that's it. that's how they make 100% of their earnings.
I am sure people have thought about this.
All the Government needs to do is to enforce compliance to such standards.
Amazon promoting its own brands isn't much different from a supermarket offering its own brand items. Apple isn't a monopoly in phones because of Android. And Google's search is so inherently tied to selling ads as a business model that separating them is a difficult argument -- plus search competitors are just a click away, as evidenced by how much Google pays Apple to be the default.
But FB, IG and WhatsApp are clearly separate products, all very much monopolies in their markets, easy to split up without huge adverse effects, and FB purchasing them was clearly done to neuter potential competitive threats.
So if any suit is going to succeed, this feels like it would be the one.
The huge difference here is that when you go into Walmart you don't announce to the company what you want to buy.
If you pay with a credit card at walmart they can collect the same data about your purchase history as amazon would as well.
The difference, in case it's not clear: Walmart is the manufacturers' primary customer, so it's irrelevant from their point of view what products Walmart chooses to sell in its stores.
The third-party sellers are the manufacturer's customers. The manufacturers still get paid either way. But we're not concerned about the manufacturers; the antitrust issue is with the third party sellers. Since Amazon uses their data to come up with competing products that are sold in the same marketplace, it matters a great deal that Amazon competes with them, and how.
“Sold and shipped by Amazon.com” means that Amazon actually bought that product and is storing it at their warehouse.
And a portion of the products that can be purchased from "Amazon.com" (the seller) are JIT orders that Amazon places with the supplier. This is why some products on Amazon are perpetually never "in stock" until a future date on the store listing page; Amazon has made the decision based on sales data to only order those products on demand. In such cases, the supplier will usually ship to Amazon for transshipment to the customer, but depending on the cost of logistics, Amazon may have them ship directly to the customer.
Walmart uses their data to figure out which Walmart brand products they are going to sell. Instead of using search terms, they use product placement, making sure to place their brand near the product it is imitating. Dandruff shampoo next to name brand dandruff shampoo: Mac 'n' cheese next to mac 'n' cheese.
In fact, it is quite amazing how much brick-and-mortar stores can figure out about people simply by analyzing receipts - in some cases, figuring out folks were pregnant before they knew. [1]
[1]https://www.forbes.com/sites/kashmirhill/2012/02/16/how-targ...
Companies paying for product placement does not change the simple truth that Walmart has paid for the product (in the legal and financial sense, even if they haven't actually forked over the cash in the actual/economic sense), and the supplier is paying for product placement through discounts or other non-cash consideration.
If wal-mart is anything like the pharmacy I worked at, magazines and greeting cards are similar (only pay for what is sold, credited for the rest, and a rep probably takes care of stocking things).
No, Walmart and Target are not like the pharmacy you worked for. Target and RiteAid were former clients, I know exactly how they paid for their inventory.
Moreover, the market for books, magazines, newspapers, and other printed material is different from other products. With print material, publishers provide discounts or credits for unsold copies against newer books/issues because the value of the unsold periodicals rapidly drops to zero after the period passes, and book stores that get burned with unsaleable books generally refuse to stock new books from that publisher if they are not provided incentives (by the publisher) to do so. Note that publishers will usually not credit book stores for best sellers like Harry Potter, etc., because the threat to not carry future best sellers is more likely to backfire on the bookstore than it is on the publisher.
Based on my knowledge of market-basket analysis, this might work, but we really don't know anything except a just-so story about target and someone's daughter.
This is really, really not a good example of analysing receipts leading to better things.
Why exactly is Amazon so much worse?
But Amazon's Marketplace is 100x the size of Walmart.com. Generally, with antitrust you start with the biggest fish and work your way down as needed.
(Walmart Retail, as discussed elsewhere, isn't comparable to Amazon.com for many reasons.)
Splitting these two will cause Amazon Products to be actually profitable.
The platform also uses its position to push their products, products they made after gathering data of items sold on their platform.
At the very least, Amazon shouldn't compete with their own customers (i.e. Sellers)
You’re better off trying to right the wrongs through litigation that sets a better market environment.
[0] Good old times, I still have a Moto G3 from back then that works like a charm, except it can't "speak" to the 4G technology that got deployed in the country where I live.
Leadership made the push a few years back when Chris Cox left to merge the code bases as much as possible. Do you trust the government to know enough to dictate how that should be undone? You can't, like, just run a "git rebase" to undo years of merging by 10000's of engineers.
Then again, maybe that is just crazy enough to work???
But these aren't the complaints being bade, at least not the ones in the lawsuits we know of so far. The Google lawsuit, for example, targets its practice of paying companies to make it the default search engine in order to maintain it's monopoly on search. It isn't seeking Google divest from its ad business.
That being said, there's no reason search can't be separated from the ad business.
I’m not aware of a business model that would keep a search company in business if they didn’t offer ads to go with it. On top of that, offering the ability to companies to target their ads to highly relevant consumers is incredibly valuable to our economy.
Amazon promoting its own brands is completely different from a supermarket offering its own brand items. You're confusing a bazaar with a retail store; the two are nothing alike legally or economically.
The supermarket pays for everything on its store shelves (except, rarely, for certain new products on a consignment basis in which case it only sales for units actually sold). Thus, it is irrelevant to the manufacturer whether the supermarket promotes their store-brand product or the name brand product; they've already been paid by their primary customer. Moreover, in essentially all cases, the name brand also made the store brand.
In contrast, Amazon not only sells alongside its third-party sellers, it uses its access to their sales data to come up with its own competing products. Notably, and very importantly: Amazon does not pay for the third-party sellers products available on its website, the third-party sellers have to pay that.
The manufacturers get paid either way (by the retailer, third-party seller, or Amazon if Amazon.com is the seller). But in the case of Amazon, the third-party sellers on Amazon's website get screwed, and that is where the antitrust concern lies.
Suppliers often credit stores for unsold inventory if they want to maintain a relationship with the store. As most B2B transactions are paid via invoices on a net-terms basis, this may mean discounts on future orders or credits against outstanding invoices. But you're store already acquired those products.
Many big chains like Walmart and Best Buy don't own a significant portion of inventory on shelves or in warehouses. The manufacturers own the inventory up until the products are paid for by the customer.
They simply might not have forked over the cash yet, which is very different--for a variety of reasons, the actual transfer of cash can take place weeks or even months later. (This is how invoicing works with most companies. If you are an independent contract, you know exactly how this works.)
Very few products in retail are sold on a consignment basis (meaning, when the product sells). Generally, only new products or slow-selling big-ticket items (like refrigerators) get sold on consignment (or similar) arrangements.
Legal title is just one of many arbitrary constructs that get applied, typically in a way that’s most advantageous to the more powerful party in the relationship.
Forking or not forking over cash can be a key component of who really holds the business risk (rather than just legal title).
That might be true if Safeway is going to buy the same number of cereal boxes from you every quarter, but that's not what happens. Stores adjust their purchases based on what sells, so if Safeway starts promoting their own cereal then they will start buying less of yours.
Notably, and very importantly: Amazon does not pay for the third-party sellers products available on its website, the third-party sellers have to pay that.
Supermarkets frequently charge slotting fees to appear on their shelves.
The manufacturers get paid either way (by the retailer, third-party seller, or Amazon if Amazon.com is the seller). But in the case of Amazon, the third-party sellers on Amazon's website get screwed, and that is where the antitrust concern lies.
Supermarkets often have contracts where they can return stock to suppliers if it is defective or not selling well and do not always own their stock.
Slotting fees, like buying ads on Amazon, have absolutely nothing to do with inventory costs.
>Supermarkets often have contracts where they can return stock to suppliers if it is defective or not selling well and do not always own their stock.
There's exceptions to everything and the parent explicitly mentioned that.
This is a bit extreme. “Shipped and sold by Amazon” is indeed a large part of their online retail and many people try to buy only directly from Amazon.
Amazon chooses which products to stock and sell direct based on the risk/reward ratio of each individual product. They determine that ratio by analyzing their 3rd party merchants data.
See the problem? Amazon can eliminate/minimize their own risk based on data from their supposed "partners".
You do know that the companies that make the name brand cereals...also make the store brand cereals...
It's about market fit. Price sensitive customers would generally not buy name brand because it's too expensive, and the brands don't won't lower-priced products to "sully" the image of the brand. Hence, they sell white label (aka store brand) products to retail stores that are generally lower quality and thus cheaper.
Supermarkets frequently charge slotting fees to appear on their shelves.
Yes, some do. For new products that they wouldn't otherwise stock on the shelves, because it's in lieu of the anticipated lost revenue from saleable products that would otherwise have gone on the shelves. Note that slotting fees are used alongside consignment arrangements.
Supermarkets often have contracts where they can return stock to suppliers if it is defective or not selling well and do not always own their stock.
Yes, but they've still paid for those products in the first place (in the legal/accounting sense). Refunds come in the form of discounts or credits on future invoices.
Let me clue you in on a few facts.
Retail stores are not paying upfront. Name a single major retailer that does this. I've yet to hear of a single one doing this.
Amazon is a bookstore. Go to any other bookstore or even distributor, and ask how quickly folks get paid who sell into their market. These folks drag the absolute HELL out of payment.
And yes, the local bookstore can return the books. They are generally not taking inventory risk.
Same thing with a grocery store. Want to get on shelf? Pay a fee? Want to sell in store? Until you prove sales volume so risk is gone, you will need to be willing to accept product returns and pay fee to cover whatever you replaced.
Want data on how your product sold at store level / by day / time etc? Be prepared to PAY for that. BTW - amazon merchants get most of this for free.
The time to pay for a product that sells in a retail store and amazon is different, and much WORSE for the retail store. You can get next day payout availability for FBA from amazon. If you sell a product through a distributor into retail - if you think you are going to get next day payment - dream on.
I don't claim that the companies "pay upfront" because that's not how B2B invoicing works. Companies pay invoices on a net-terms basis (ranging between 30 and 180 days after the underlying good or service is provided or received). But they have signed the legal contract agreeing to pay before they received the inventory (and indeed before the inventory was even queued for delivery), and so legally, they are required to pay.
For financial and tax purposes, they are treated as having paid (because the expense has accrued) even if, economically, they have not actually forked over the money.
And yes, the local bookstore can return the books. They are generally not taking inventory risk
This is not true. The local bookstore has taken on inventory risk. B&N takes on inventory risk. They can, however, ask the publisher for discounts or credits for unsold books, and publishers generally give those out like candy.
Same thing with a grocery store. Want to get on shelf? Pay a fee? Want to sell in store? Until you prove sales volume so risk is gone, you will need to be willing to accept product returns and pay fee to cover whatever you replaced.
Yes, and I've never claimed otherwise. If you want to replace items on the shelf that are selling, you need to pay the store for the risk of your replacement product not selling. But once you have established that record of sales, they buy future inventory. Note that for most retail stores we are talking about here (grocery, gas stations, Target, Walmart, etc.), these trials last a day or two; maybe even a week for slower-selling product types; trials may last longer for specialty stores.
Means very different for products with a limited shelf life. The cost to “replace items that are selling” doesn’t just cover the risk, it also covers the items actively sitting on the shelves. A store is only buying new items after the old items have sold, so that continues indefinitely. A store is thus better off of if an item stops selling in 1 year than 1 day, as the replacement item is also subsidized.
If my brand is diluted then there's no reason to keep using me to create the store brand. Being the manufacturer of the store brand is just signing my own death sentence.
It's the same with Amazon. They may not be using the "name brand" manufacturer all the time, but Amazon doesn't own factories that make Amazon brand products. They use OEM's like everyone else. They don't own farms and dairy mills for their grocery products.
> it uses its access to their sales data to come up with its own competing products.
Every retail chain has data on what gets sold inside and where it was kept, how it was promoted etc. They can very well use this data and most probably are using it.
> Thus, it is irrelevant to the manufacturer whether the supermarket promotes their store-brand product or the name brand product;
Only till the time when their store brand starts selling much better and consumers develop a relationship with that.
> But in the case of Amazon, the third-party sellers on Amazon's website get screwed, and that is where the antitrust concern lies.
Isn't this very similar to the third party sellers having their own Shopify store and someone discovering it through Google Search/FB Shop instead of Amazon Search. The only argument that makes sense here is the usage of data.
Yes, they are. They use this data to determine what products (specifically, what SKUs) to re-order from their suppliers.
Only till the time when their store brand starts selling much better and consumers develop a relationship with that.
I don't know why techies keep pushing this like it means something. The store brand product IS MADE BY THE NAME BRAND SUPPLIER.
I repeat, the store brand is just a different SKU offered under the name brand's white label product line. For example, Home Depot's RIGID tool like is made by the same company that makes Milwaukee and Ryobi. Those store brand cereals are made by General Mills. The store brand milk comes from the same regional dairies as the local regional name brand. Every single one of Costco's Kirkland signature products is made for them by a supplier that makes their own name brand products.
Isn't this very similar to the third party sellers having their own Shopify store and someone discovering it through Google Search/FB Shop instead of Amazon Search. The only argument that makes sense here is the usage of data.
No, because Shopify doesn't compete against its own sellers. The antitrust concern arises solely because Amazon is both the platform and a competitor and it uses its access as the platform provider to acquire data to compete.
But we are asking how is Amazon different? All of their store brands share manufacturers with name brands. They haven’t developed their own textile mills and coffee roasters...
One can always make the argument then, that just use Shopify and don't come to Amazon. Amazon can even make the case for Google and FB having sufficiently big audience size for customer acquisition.
Unlike an app which needs to go through AppStore to end up on an iPhone, a product being sold on Amazon doesn't need to go through them for customers to purchase it.
> Yes, they are. They use this data to determine what products (specifically, what SKUs) to re-order from their suppliers.
So does Amazon, but both don't limit themselves to just this use case.
Supermarket economics are more complex. Brands have to pay to go on promotion, and they have to pay to appear in the catalogue. I've heard placement fees for mailbox catalogue placements can be a significant bulk of revenue for some companies.
My wife recently started in a new company with retail products and was appalled at what goes on, but it's normal. The supermarket wants to promote your product? Pay up. Per product. They choose which, not you. If you don't, there's a good chance your shelf space gets replaced by a competitor next time it's under review. If you do, you'll often lose money while it's on sale. It's a very predatory arrangement enabled by the duopoly here in AU.
Whoa, what? Total news to me. Source? Or do you work in this sector? This is really interesting.
With cars, there are often just superficial differences to create a much larger perceived value difference between an Audi or VW or a Lexus or Toyota (on some models).
I find this topic quite fascinating, as it relates to human psychology.
There are a lot of sources online, see for exapmle https://hip2save.com/tips/store-brands-made-by-name-brands/.
White labeling is frequently more profitable than selling a name brand product because you don't have to spend money on marketing, but due to the different level of quality in most store brand products, the suppliers generally prefer to leave their brand off the package and put only the legal minimum identifying info require. As a result, unless you actually work for one of the brands involved (the store or the supplier) it's extremely hard to know who the supplier is. But every store brand product you buy in a major U.S. retail chain is made by a manufacturer of a name brand product in the same space.
(On a similar note, most U.S. "craft" whiskey is made by the same distillery. White labeling for the win. https://www.whiskyadvocate.com/different-craft-whiskey-mgp-d...)
It just feels so obvious. What leads someone as smart as Bezos to ignore this line of reasoning? Even if it turns out that it's not "illegal," I feel like deep down, people inside the company just know what they're doing is slimy, or at least, unfair.
Wouldn't it be in the best interest of Amazon to call itself a marketplace (or 'bazaar') to avoid future legislative action?
Supermarkets might pay for the product, but Kellogg’s, Budweiser, etc pay them for shelf space, eye level, end of aisle placement, etc. there is a dozen ways they make money off the sellers. Supermarkets don’t just pay for product as a textbook marketplace
I don't see how this invalidates the analogy. Brands paying for eye-level placement is the same as 'sponsored products' on Amazon. Any Amazon Seller has a right to do this and Amazon has the right to sell this access. Just like any brand has the right to meet eye-level requirements.
Yes, supermarkets have a store brand. Yes, they may also place store brand items at eye-level at no cost. But! I think there are two key differences:
1) In most cases, supermarkets buy from the existing product manufacturer at wholesale in order to be able to slap their brand on the product and use other cost saving measures (ie: bland, cheaper packaging, etc) to sell the same product at a lower price. In cases where they don't buy from the manufacturer, the copy of the product is likely not covered by a patent or is different enough as to not infringe on the patent/trademark.
2) Many Amazon Sellers are small independent companies, just look at their success stories page [1] to see the extent to which they market to small business owners. These businesses likely can't afford to patent their products and when Amazon decides to copy their product (based off the data they collected [2]), they can't defend themselves and their product effectively.
Not all Amazon brand products are a problem. The biggest issue is the exploitation of companies in a certain 'sweet spot' on its platform. These small businesses have taken on risk to provide a good product that sells well, but aren't big enough to patent the product or hire lawyers.
Maybe Amazon is just a symptom caused by the imbalance of power in the economy right now. Either way, it's unfair and should be fixed. I think separating Amazon "the marketplace" and Amazon "the competing store brand" would help (as long as Amazon "marketplace" sells store data to Amazon "brand name" at the same price it offers everyone else).
A law requiring store brand items to be made from an existing manufacturer in it's "marketplace" would also help. Supermarkets would be mostly unaffected, Amazon would need to a) buy the product from it's Sellers at wholesale volume (like a supermarket) and b) compete based on other merits like faster shipping, customer service, etc.
[1] https://www.amazon.com/b?node=13496283011 [2] https://www.wsj.com/articles/amazon-scooped-up-data-from-its...
Why do you think physical retailers are not doing the same thing?
Antitrust law only considers consumer welfare. It's perfectly legal to use monopoly power to squeeze third-party suppliers. Especially if any of those cost-savings are passed along to consumers in the form of lower prices. (Which is pretty indisputable with Amazon.) Antitrust only exists to protect consumers, not other businesses, competitors or suppliers.
What is the "market"? Things people do on their phones? What are they precisely monopolizing?
And WhatsApp, of course, the competitors are iMessage, GChat, and MMS/RCS that’s already built right into every phone.
Basically if you define social network as something exactly like Facebook then, of course, that's what it is and everything else is excluded.
Netflix is probably the highest risk of being acquired by someone like Apple, or more likely traditional media owner like Disney or Comcast.
A lot of companies are like that, one could think that it's "easy" to split up Google Maps from Gmail and Google Calendar, or Office 360 from Azure and Windows, or Salesforce and Slack and ...
Doesn’t seem like a good political move to go after those companies in my opinion. By comparison, Facebook is loathed by both parties for different reasons.
Disclaimer, I used to work at Amazon.
> Please don't post comments saying that HN is turning into Reddit. It's a semi-noob illusion, as old as the hills.
Imagine, for instance, trying to get actual USD (NOT USDT!) for BTC when that fever dream ends.
I'm not saying it's never happened, but implying it's some sort of repeating pattern is simply false.
The others, as the articles point out, were trade volume related (which is also a problem, but much less sinister).
There's no evidence this is some kind of grand conspiracy like you implied. There's plenty to criticise in Crypto, but little evidence for what you actually claimed.
Your comment implied sinister intent: That exchanges go offline at key times in order to scam people.
No evidence was provided of that. The sources you provided point to technical problems that are perfectly understandable during a massive, unpredicted surge in such a technically complex field.
Way beyond giving them the benefit of the doubt at this point.
I take solace in the fact that some of biggest regrets or mistakes that Warren Buffet & Charlie Munger say they have made are those that you don't see - the deals they could have done but didn't and, in retrospect, should have.
The "Onvao Protect" traffic snooping VPN to identify what up and coming products people were using was one particularly shady part of this strategy.
And hindsight is 20/20.
I was absolutely and utterly wrong on both accounts. Part of it was definitely wishful thinking, though, as I dislike FB by one or two orders of magnitude more than any other software company.
But yes, I'd say their acquisitions were not completely obvious slam dunks.
They also tried to be Snap, ofc, but my recollection is that Snap refused. Interestingly, folks have probably flip-flopped over the last few years in wondering whether that would've been good or bad for FB.
For instance, daily time spent in using Instagram on a per-user basis, whether that use was associated with a drop in Facebook use, and how patterns in that relationship broke down across demographics.
I didn't think they were no-brainer acquisitions at the time, but they've certainly turned out to be in hindsight. Was Facebook just smart or lucky, or did they have a lot more data than we did to judge those decisions?
FB buying up the competition probably helped too.
Which the FTC could have stopped at any time.
I don't follow usa politics all that closely, so i'm honestly curious how specificly were they cozy?
Facebook The Platform's userbase keeps getting older and less engaged, millennials and younger have largely shifted to instagram. Taken by itself, Facebook the platform doesn't have great looking prospects.
Instagram is the current hot thing, and is keeping Facebook The Company on the growth trajectory, but it too will suffer the same problem eventually.
Now that Zuck is under so much scrutiny, he won't be allowed to acquire the next hot social platform. When instagram isn't the "it" platform anymore, Facebook is doomed.
My prediction: if the US government does nothing, Facebook the company will slowly peak and then start shrinking over the next 5-10 years and the problem will start solving itself.
Their data moat becomes infinitely less valuable if the graph of users and engagement is a downward slope instead of an upward one.
Zuck got around that problem copying competitors lock, stock and barrel and using his monopoly to attempt drive out that competition.
Instagram was under threat by two "It" networks. Both of them ended up being copied in Instagram
Facebook needs to be broken up into three companies to fix it all.
It’s hard to compete with Instagram because everyone is already on Instagram, not because everyone is also on Facebook. (A lot of IG users don’t use FB much, and vice versa.) A freestanding Instagram could still easily copy and crush competitors.
I'm not sure on what grounds the US regulators would have blocked the Whatsapp acquisition, as it basically had no competition implications in the US.
The Instagram one is harder. Sure, it was a better version fo Facebook done right for mobile, but it only had 10mn users when acquired.
I'm not convinced that IG would have been successful if it hadn't been bought by Facebook. For an example of how things can go wrong, look at Snapchat vs Instagram.
Then recently it grew a marketplace to take on craigslist and ebay, and added videos (making it a mini youtube or tiktok).
And let's not forget that FB groups are the go-to place for many hobbies. Into old cars? Or old sewing machines? You won't find an active forum for those things, or if you do, they're 1000x more hostile and trollish than FB's groups.
So my question is, where do you draw the line? Was FB marketplace anticompetitive because it pushed out craigslist?
I guess this whole thing is a fishing expedition to see if the justice department can find a smoking gun email where someone says, like, "Let's be anticompetitive with snapchat" or something...
There are other marketplaces that proved the value of identity and reputation like Mercari and offerup in p2p before fb marketplace launched its own.
I do think FB would stomp or buy other marketplaces, but that there is even a smidgen of opportunity in this space in the US is due to the neglect of buckmaster and newmark.
They went from benevolent dictators to doggedly avoiding any increase in value to users.
This has happened at great detriment to Craigslist users who have been scammed, dealt with well-known but terrible landlords and wasted countless lifetimes due to the shoddy communication features of the site.
I am no fan of Facebook, but have only crocodile tears for Craigslist.
good lesson in there that some domains just don't mix
And Facebook login being "necessary"?... Never used it. Never will.
> The FTC is seeking a permanent injunction in federal court that could, among other things: require divestitures of assets, including Instagram and WhatsApp
I know it's a pipe dream, but an independent Oculus would make me so happy. I suspect this is impossible due to the early nature of the VR market. Maybe just an FTC requirement _not_ to require a FB login?
It appears VR is still too small of a market for them to care about.
1) VR ever becoming a huge player. It might. It might not. Right now there's no real evidence that VR will actually become a big deal, and Facebook could argue that this is a niche offering that can't be anti-competitive because there's no real market yet.
2) The feasibility of VR technology independent of major vendors. There's a strong possibility that without a huge R&D budget VR will never overcome the hurdles that might keep it out of the mainstream. Facebook could argue that removing Oculus would doom VR to failure in the market.
3) The Sirus/XM merger removed 100% of satellite radio competition (there's only one vendor left after the merger), but both Sirius and XM successfully argued that the market isn't big enough to support multiple vendors. Facebook could argue a similar case, that for the health of the VR market there should be fewer competitors.
I'm not a lawyer so I don't know if any of those would be winning arguments, but based on previous anti-trust cases I've followed that would be the strategy I would expect. And it might be why the FTC didn't go down that path.
-What if a lot of people use these in the future
-What if they're really comfy when they get slim, and people use them all the time, even for essentially web browsing.
-Later models can easily have internal and mouth facing cameras so you can smile at people in VR
-Let's intimately observe the finest twitch of every expression felt by our users, peering deep into their minds, learning more about how to manipulate and destroy humans than anyone ever thought possible.
(Apologies to George Orwell.)
What would you do with it? What wouldn't you do with it?
Oh what’s that? Your eyes looked at the logo on the shirt the hero is wearing, are you perhaps interested in learning more about where you could buy it?
While that would cool for short-term, independent Oculus can stagnate. VR still needs many more billions to be truly usable, and I don't think independent company will be able to fund it.
My experience has been that technology is far more likely to stagnate at BigCo than SmallCo - especially if SmallCo's only source of revenue is said technology.
I don't think the issue with VR at this point is so much technical than it is that nobody's yet been creative enough to make something truly unique with it.
I'm still a believer, but I suspect there are other non-VR technologies that either need to catch up or just figure out how to dovetail for VR to be anything other than a novelty.
Only when AR is a thing will they stat to push for profitability.
This should be illegal. Amazon and Uber have wiped out small players.
In terms of loss, the actual hardware is profitable as far as I've heard.
There should be regulations around both of these, but they'll need to be different ones.
From an entrepreneurial point of view I wonder how it will affect the future of big tech players acquiring other companies.
It won't.
The full power of the United States does not reverse all those shares you sold to a big tech company, or sold as a big shareholder of a big tech company.
If the market tolerates a price, based on their own exuberance and view of future revenues, that is fine here, and the incentives will continue to promote near term profits with a who-gives-a-shit slim possibility of cleanup by the regulators.
Corporations are just a conduit for money, and the regulators only enforce actions on the conduit, and thats a maybe.
1. That FB split into N independent companies, whereupon each share of FB would become 1 share in each of N companies.
2. That the supermajor shareholders (say, more than 10% of any company) each pick at most one company to retain that interest in, and sell off shares in the other companies until they had less than 10% of each of those).
3. That the new companies avoid overlapping directors.
It would be a long time in court. See the breakup of AT&T.
https://money.cnn.com/infographic/technology/att-merger-hist...
Worst case: there's a lot of legal kerfuffle and he is a multi-billionaire
I agree we would’ve been better off if they had never been allowed to buy Instagram AND we had meaningful laws in place, but I don’t see how this fundamentally changes things given where we are now.
* No ads (lol)
* Competition from Google even if it did have ads
* FB had no competitive photo app
Instagram for $1B? WhatsApp for $17B? Really?
FTC definitely isn't competent enough to understand how visionary the acquisition was.
To be fair, not many was that competent. Otherwise, Google and other cash-loaded companies would have acquired these companies with higher offer.
It could have easily been Twitter + Vines + Periscope where the acquired products went nowhere.
It's unfair to Zuck for being very visionary about this. But antitrust isn't about being fair to an individual company...
Maybe that's a sign that the acquisitions deserved more scrutiny?
But everyone will make up a number to support whatever side of the argument they are on.
In any case, Whatsapp as a standalone company would definitely go bankrupt. The infra cost would be insane with such little revenue.
I personally disagree with the idea that Zuck was being a "visionary" here. I don't think buying Instagram for $1bn was a particularly visionary move but rather just... cautious. Facebook also bought Gowalla, Lightbox.com, Friendly, TBH and tried to buy Snapchat, Musically (since merged into TikTok), Houseparty, etc. All these are/were competitors and threats. Some were small, some were big. Some worked out and grew, others didn't.
The Instagram acquisition happened fairly early on, so it makes sense that it was worth a lot of money to Facebook. Now that Facebook is huge it can get turned down by a company like Snapchat, and it'll just go ahead and copy/improve its features with its much-larger team, capital, and user-base. Back then, buying the competitor was the best option since Facebook didn't have as many resources or reasons to believe they could compete as effectively.
Moreover, I'd argue the reason Instagram worked out so well is precisely because it got acquired by Facebook. Had Instagram had to figure out its own monetization strategy, find its own clients, compete with the established players, build its own infrastructure, etc. it probably wouldn't have been able to grow as much or as quickly.
But seriously, by what rationale would you block the purchase in 2012? Instagram only had 25 million users at the time.
Facebook was huge, and Instagram didn't represent anything Facebook couldn't just build themselves, other than the growing user base. So there is your rationale, the behemoth shouldn't be completely free to consolidate users. Of course the details of how big is too big and so on are the hard part.
I'm holding off on merging my Oculus and Facebook accounts as long as possible in hopes that someone tells them to get the hell out of here with that nonsense.
And since WhatsApp is a chat app, how about all the other chat apps I am using? iMessage, Slack, Teams.
Does this action has any merit or is it just the usual political posturing and games?
"The antitrust laws prohibit conduct by a single firm that unreasonably restrains competition by creating or maintaining monopoly power. Most Section 2 claims involve the conduct of a firm with a leading market position, although Section 2 of the Sherman Act also bans attempts to monopolize and conspiracies to monopolize. As a first step, courts ask if the firm has "monopoly power" in any market. This requires in-depth study of the products sold by the leading firm, and any alternative products consumers may turn to if the firm attempted to raise prices. Then courts ask if that leading position was gained or maintained through improper conduct—that is, something other than merely having a better product, superior management or historic accident. Here courts evaluate the anticompetitive effects of the conduct and its procompetitive justifications."
Does FB unreasonably restrain competition? (My answer is no)
Does FB have an alternative? (Mewe/Parler/Gab etc. - Mewe being the most direct alternative)
Then courts ask if that leading position was gained or maintained through improper conduct—that is, something other than merely having a better product, superior management or historic accident. - I'd say no.
I don't see anything this lawsuit stands on.
[1] https://www.ftc.gov/tips-advice/competition-guidance/guide-a...
For a time people had few alternatives to Instagram or Facebook, which were effectively in competition with each other. This meant that has Facebook monetised your data more, ie increase prices, users were forced to pay if they wanted to stay on a popular social network.
TikTok is a recent phenomenon. Secondly it is not enough to consider the UX cost of switching to another platform but also the network effect. Is Mewe/Parker/Gab really a substitute for me if I don’t enjoy the network effects I have on Facebook or Instagram?
I don't use Instagram and have used Whatsapp prior to FB acquiring it. There has been no "roping in" of any sort that I have noticed, and while my experience is clearly anecdotal, there doesn't seem to be anything to link to that that I've observed. Perhaps I'm naive, but it would be good to see something concrete in this regard.
"The monetisation of your data in exchange for adverts can be seen as the cost of the platforms. By aggressively increasing advertising on Instagram and attempting to take steps to monetize WhatsApp, Facebook are raising prices. As far as I understand the question is whether it is their abuse of monopoly power that allows them to do this."
I guess I would call that profit-making, not "aggressive monetization". The alternatives exist and they are all easily accessible. Put yourself in their shoes - would you run a non-profitable enterprise? At what cost? Let's not lose touch with the fact that this is still a capitalistic economy.
It will be interesting to see the government prove this for Facebook while ignoring the 800lb gorillas of Google/Doubleclick or Amazon’s ad network.
The notion that FB increase ad prices by increasing the supply of ads is completely insane though, and I hope that's a misunderstanding by the parent poster.
FB/IG have an auction-based ads system, which means that you pay what other advertisers think the user is worth, rather than what you think the user is worth. In such a system, prices increasing (along with supply) is a symptom of massive, massive demand rather than a nefarious plot on FB's part.
Don't get me wrong, FB have done a bunch of shady stuff over the years, but this lawsuit seems pretty wrongheaded to me.
However the cost that users pay for engaging on the platform is the use of their data. So I guess what I meant by aggressively increase the “price” of advertising was referring to the hidden cost of Facebook being able to serve adverts in the first place.
As others have pointed out, anti-monopoly legislation os largely about preventing firms from abusing monopoly power to increase prices. If you consider the cost of using a social network to be the data the user provides, then the more data the user gives up to the use the social network, the higher the cost. Because of the strong network effect, users may have little choice but to stay on the platform if they wish to engage in the social network. The notion is that Facebook are abusing the stickiness of their social network by increasing monetisation of user data, knowing that users won’t easily leave.
By purchasing Instagram and WhatsApp, at the time the two biggest threats to engagement on Facebook the website, Facebook the company are able to coalesce the three networks, making stickiness stronger, making it easier to raise prices (consumption of user data in exchange for adverts) and thereby abusing a monopoly position.
Unfortunately this is a wildly speculative argument, which is unlikely to find favour with regulators in this case.
Even if it weren't speculative, how do you define the value of data? Is it by bits and bytes, or as the expected lift from incorporating it into a model? If I improve FB's/Google's ad models, do I increase the cost of all of their users? That seems ludicrous to me, but maybe that seems fine to you.
> However the cost that users pay for engaging on the platform is the use of their data. So I guess what I meant by aggressively increase the “price” of advertising was referring to the hidden cost of Facebook being able to serve adverts in the first place.
This is a trade. You and I may think this is a poor trade, but it's one that many, many users make (and like) daily. In no sense is it a cost.
Additionally, if (hypothetically) one chooses to make advertising-supported websites illegal, then that leads to FB (and Google) shutting down, which I don't see as a net positive for the world. (Certainly most of their users wouldn't think so).
> By purchasing Instagram and WhatsApp, at the time the two biggest threats to engagement on Facebook the website, Facebook the company are able to coalesce the three networks, making stickiness stronger, making it easier to raise prices (consumption of user data in exchange for adverts) and thereby abusing a monopoly position.
So I don't agree with your argument about prices, so I'm not going to engage with it further (if you need to explain what a standard term means in the context of your argument, that's normally a warning sign).
However, IG had 20mn users when it got acquired. The consensus here was that it was a terrible idea and that FB would shut it down. We're now in a world where it has 1bn users and mints money for FB. Now, it definitely looks like FB acted badly.
But consider the alternative. FB are blocked from buying IG, so IG need to set up a sales team, an adevertising method and epxand globally. None of these things are cheap or trivial. There does exist a world where IG competes on a level-playing field independently, but I would argue that at least 80% of the time, this hypothetical leads to IG either under-performing or flaming out.
And to be fair, at the time of the IG purchase, the biggest threat to Facebook was mobile (once upon a time, FB had no ads on mobile).
Whatsapp again, should have been stopped by the EU, but there were little to no competition concerns raised within the US based on that acquisition, as nobody in the US used Whatsapp at the time.
I admit it is speculative but the argument encapsulates the abuse of the social network as I see it, which is why I'm running with it. It remains to be seen what angle the regulators will present when proving abuse of monopoly power.
However I cannot separate what Facebook is able to do on its social network without consequence from the idea that Facebook is an abusive monopoly.
> If I improve FB's/Google's ad models, do I increase the cost of all of their users? That seems ludicrous to me, but maybe that seems fine to you.
Consider the "user price of improvement". Suppose that an initial model m1 only needs to regress on a users age, gender and location to guarantee a clickthrough rate of x%. As the social network grows and there are more users, a larger variety of adverts and longer engagements, all else fixed the clickthrough rate will go down if the users start seeing more irrelevant adverts (more ad bidders but same relatively static input features) as well as repeated adverts (longer engagement times but same input features).
In an effort to increase clickthrough rates either beyond x% or at least to maintain x% in a growing network, the model needs more express power. So m1 is expanded to m2 now using accumulated likes. Fine likes are activity which is generated on FB so that's fair game. But there's a small cost in user privacy: suddenly adverts can be targeted based on your likes.
The network grows and clickthrough rates must still be improved. m2 is expanded to m3 by incorporating activity with friends, including mutual likes. Again this is generated on the social network, but there is a privacy cost: adverts are served based on public and perhaps private interactions.
The network grows and clickthrough rates must still be improved. m3 is expanded to m4 using browser trackers, so now your activity outside of Facebook is used to serve adverts: the privacy cost is increased and suddenly becomes real. FB serves adverts to you based on anything you do on the internet.
<side note: I recently ordered widget A using my laptop browser and the next day I saw an advert on IG for widget A from a competitor on my mobile device. I don't have an FB account and I'm not logged into IG on my laptop browser. I have never seen adverts for widget A on IG until this moment>
Back to my argument. Now at this point FB has a strong social network based on your activity and your friends' activity as well as external network effects based on browsing trackers, log-in with FB identities, as well as your friends' external browsing activity.
The transition from m1 to m4 has required using more and more of your personal data (whether public or private) in order to maintain a clickthrough rate of x%.
> This is a trade. You and I may think this is a poor trade, but it's one that many, many users make (and like) daily. In no sense is it a cost.
Each time the model is improved by adding additional features, those features aren't acquired for free. They're acquired by deliberately mining users' personal information. You might not think this is the case, because data is data and data is stored in bits and bytes, but it has representational value that in many parts of the world (most notably the EU) is protected.
In other words, the change from m1 to m4 in order to serve adverts has incurred a cost in terms of the private data a user must give up in order to receive adverts that are relevant to them (ie maintain a clickthrough rate of x% or higher).
So yes in this sense it is a cost.
Furthermore, in the 21st century, data is a clearly a resource, and has monetary value. It can be mined and gathered from users, which is then used to generate revenue from advertising. Users are not compensated for their data but instead are provided with a free service. If the alternative was to pay for the service, what would the monetary value be? That is the opportunity cost of providing data instead. So yes in that sense it is a cost.
Now let's consider consent. Facebook makes all users accept a privacy policy which constitutes as consent (the minimum requirements now may be higher but the tactic is the same). If the user disagrees they can't use the service. In most cases the user agrees because they want to use the service.
However as Facebook has a large social network and users' don't have many alternatives, the incentive for users to agree to the privacy policy becomes stronger.
If Facebook didn't acquire Instagram, then that last effect is weaker because users' have an alternative. If Facebook mined more data then Instagram, then Facebook is more "expensive" to use than Instagram and vice versa. Competition between the two networks would increase supply and reduce the cost of data required to use either network.
By acquiring Instagram and merging social network graphs (inputs to the model), Facebook effectively remove that dynamic, which gives them monopoly power to keep mining more and more data for marginal or perhaps zero benefit (an increase in costs).
Whether that dynamic would actually play out between users in a world where they are competing networks remains to be seen. Maybe it doesn't and for any network its a race to the bottom in terms of privacy regardless of the number of players.
> But consider the alternative. FB are blocked from buying IG, so IG need to set up a sales team, an adevertising method and epxand globally. None of these things are cheap or trivial. There does exist a world where IG competes on a level-playing field independently, but I would argue that at least 80% of the time, this hypothetical leads to IG either under-performing or flaming out.
Both of these outcomes are speculative, but I'm not convinced about the 80% figure. I'm not sure that IG needed FB alone to get to a billion users. Many of those users aren't necessarily people and are companies, organizations and other entities which use IG for engagement. It's enough that people spend more time on IG than FB the app or website to convince those entities to engage on IG. Not sure what the proportions are exactly but just giving an example.
Anyway, good points you've made and I've learned something so I'm willing to call it a day. I wrote this last essay simply because many of the points you made were simply too dismissive of what I said, without substantiation. Of course I'm not claiming to be right about how regulators will approach their argument, just stating a viewpoint on how FB is able to increase costs for the user, in terms of privacy, while being able to get away with it.
> Additionally, if (hypothetically) one chooses to make advertising-supported websites illegal, then that leads to FB (and Google) shutting down, which I don't see as a net positive for the world. (Certainly most of their users wouldn't think so).
Not sure why you brought up the prospects of advertising-supported websites being illegal. The purpose of regulation is to control abuse. GDPR in the EU does not making advertising illegal, but rather places limits on what information can be used. In the same way that road rules don't make driving illegal.
Both of these outcomes are speculative, but I'm not convinced about the 80% figure. I'm not sure that IG needed FB alone to get to a billion users. Many of those users aren't necessarily people and are companies, organizations and other entities which use IG for engagement. It's enough that people spend more time on IG than FB the app or website to convince those entities to engage on IG. Not sure what the proportions are exactly but just giving an example.
IG had less than 20mn users when acquired, literally nobody cared about it outside of the early-adopter crowd in SF. In general, value comes from execution rather than the idea, and I am definitely not convinced that IG would be anywhere near where it is today without Facebook, which leads me to believe that breaking it off at this point is pretty unfair.
Like, another way FB could have competed would have been to buy IG and let it die slowly. Given this anti-trust suit, that would appear to have been the smarter move, but it definitely wouldn't be overall better.
Lets also note that FB became popular not just because it was good, but because it was good and always stayed up, regardless of user growth. That has probably been one of the major engines for IG growth.
Finally, the success of IG was also driven by the use of free advertising on FB, without that it would have taken a lot longer (and cost a lot more money) for them to reach the scale that they have now.
Again, thanks for replying. I'm still not convinced by your model of the cost of IG/FB, but I appreciate that it's reasonably well thought out.
[1] https://www.reuters.com/article/us-facebook-instagram-idUSBR...
The lawsuit specifically cites Zuckerberg talking about acquisitions (in this case, the failed Twitter acquisition) as giving "extra time... to get our product in order without having to worry about a competitor growing".
Having an entry in Facebook’s users table is a long way from using Facebook for your social networking to the exclusion of competitors.
These don’t really compete with WhatsApp, which is cross platform, not tied to an employer, doesn’t require an invitation, subscription, friend network, setup to use, among other things.
Even in countries where iPhones are ubiquitous the cross-platform nature of Whatsapp and the fact that everyone from your friend to your grandmother is on it, makes it dominant.
Yes you could use Slack to message your friends like you would on Whatsapp. The experience won’t be the same, and setup will be a hurdle. But would you use Whatsapp to replace Slack at work?
I think the term “compete” is used very broadly here.
do you have data to back up that claim?
https://www.similarweb.com/corp/blog/mobile-messaging-app-ma...
And as an alternative source:
https://www.messengerpeople.com/global-messenger-usage-stati...
"4. iMessage
Communication apps like WhatsApp are available on practically all devices, whereas native apps like Apple’s iMessage (and now Apple Business Chat) are limited to one provider.
However, the user base for iPhone is constantly growing in the USA. A lot of adolescents prefer iMessage to apps like Snapchat in order to reach out to their friends.
Since iMessage is a pre-installed service of Apple, there are no official messaging usage statistics as they keep those “in-house”. Looking at the ever-growing demand and distribution of iOS devices though, we can assume that the pool of iMessage users is growing. In the fiscal year of 2017, Apple reached a quantity of 216.76 million iPhones."
iMessage no worky for groups because you'd be excluding the Android users. Group SMS... I don't think anyone over here is even aware that's an option. I only know about it from Americans on HN saying they use it.
See Skype, for example - the largest market penetration for a period of time and practically no one uses them any more. They were video-centric, yet the user base is already there for an extension into a primarily text medium. Not tied to an employer, doesn't require an invitation, subscription, friend network, setup to use, etc...
Whatsapp has other competitors currently. Telegram and Viber come readily to mind, and I am certain there are other services that I'm not aware of, the old fart that I am.
Whatsapp was incredibly popular in most of the underdeveloped world, where it became the de facto messaging app because of the low data requirements and ubiquitousness (and probable subsidies via the ISP provider). This was prior to FB buying them. Out of my group of contacts, the Telegram app notified me over the past year that roughly 2 dozen have signed up for it, e.g. That's another (albeit anecdotal) sign.
I understand the antagonism toward FB/Whatsapp/Instagram, given the consolidation of social networks within the purview of one entity, but not a single one of those services is a monopoly.
Could very well be I don't understand the intricacies of the law, and such consolidation is perhaps illegal for the betterment of society, but I'm not convinced that's the case still. Microsoft, for example, was accused of monopolistic behavior because they had enough power to pressure manufacturers to bundle IE with the OS. No such thing is happening in this situation. IANAL, but that's my simplistic take on it.
I stand to be corrected.
Hindsight is 20/20 but at the time of acquisition it was far from a sure thing and it's safe to say that without Facebook resources Instagram would not be what it is today.
So yeah, there's really no "competition". Either you have whatsapp or you don't talk to people.
And it's highly used for cross-business communication in Europe, I can tell you that.
Either you use WhatsApp or you don't talk to people.
And I'm not saying this is a bad thing, really.. I think "monopolies" have their place in standardizing things that we do and it makes it convenient.
(Side note: if fucking Apple would open up iMessage on android/windows they would OWN the chat market in a matter of minutes in the US)
But there does get to a point where you cannot say "people use it because they like it". Most people use it solely because everyone else uses it.
Just like Facebook. There is no "alternative" for real-life profile social media. If you want to use that type of social media, Facebook is the only thing whether you like it or not.
Facebook started off in a market with Orkut, Myspace, Friendster and along came Path, Twitter, Google+. Facebook had network effects and people gravitated towards it.
So this is basically saying network effect is bad. You cant get too popular.
Which would mean that the lawsuit would fail. pretty much everything that happens outside of the USA is irrelevant for this lawsuit.
It's not actually illegal to be a monopoly but to illegally abuse your market position leading to anti-competitive behavior.
Unfortunately, it's never enforce properly as the FTC doesn't have any teeth.
I think the only way we're going to solve this is to actually TAX these companies appropriately. This is one of the major reasons they metastasize.
I’m still confused as to which “market” is harmed: advertisers? Facebook users? other social networks?
If the market is Facebook users, what’s the precedent in asserting this level of harm to a market that consists substantially of non-paying users of an inessential service?
Several people will say, "try not having a Facebook account and participating in X," where X is some mandatory part of your life, such as your children's schooling, keeping up with relatives, job-related stuff, social clubs or organizations, etc. It might not be impossible, but it's an undue burden in some cases.
It's impossible to keep up with college affairs without Facebook, as a Facebook group is the primary method of communication and organization.
It was even worse before the pandemic, since there were no MS Teams or Google Classrooms for each subject. If an assignment was released, it was the representative's Job to male sure it reaches everyone. Guess what did they use?
Oh the assignment is delayed? TA announces on Facebook group. Midterms Time table? College Facebook page. All college-wide announcements were made through its Facebook page.
Facebook is practically essential for college life. You could say it's the College's fault, but that's not our discussion. What's important is that I can't delete my Facebook without causing a lot of pain in the ass for myself.
Even with scare quotes it's not a multiple: the social network of Facebook users is an advertising market. You don't have to be a snot-nosed growth hacker to see that FB has a monopoly position in advertising.
Here's a test: does FB have any reason to care about the quality of whatever is being advertised in any one ad? Where are you going to advertise if FB keeps putting your ads for your doctor's office next to ones for a child-rape rock opera and/or "COVID-19 is a hoax" seminars? What is your recourse, switching your advertising to Parler and LinkedIn? NYTimes dot com? The 72 next most popular social networking sites around the world? Surely VKontakte runs a clean house.
Again, look at railroads. In the Trust era, trains were not the product, were not the market. Transportation was.
Here's a nice little rundown: https://twitter.com/jason_kint/status/1336813617736507397
We had a few decades of true antitrust, but the efforts to undermine it were successful. Check out Goliath by Matt Stoller for a decent history.
The allegation here is anti-competitive behavior. There are plenty of things you an do that are anti-competitive and illegal without actually achieving a monopoly. The classic example is price fixing but there are many others.
Unsurprisingly, the actual linked article in this thread spells out these allegations of anti-competitive actions on Facebook's part.
Twitter, TikTok, and HN all thrive on strangers communicating with each other.
It's the fact that Facebook is "Facebook" that is the problem. That you can't imagine Facebook's equal being viable in any way, other than to mention the wagons and horses of the internet. This is not to comment on a level of sophistication, but features. What can you sell on TikTok through TikTok? It's a category error to equate them with FB. Facebook has cultivated this state of affairs, and they have gone out of their way to interfere with the success of companies it views as competition.[2]
This is even before we get to the use of Facebook to create negative externalities, for which it provides powerful tools. On purpose.
1. https://en.wikipedia.org/wiki/Sherman_Antitrust_Act_of_1890#...
2. https://techcrunch.com/2020/07/29/in-antitrust-hearing-zucke...
I have no knowledge in this area, so just throwing it out there for more informed minds to fill in the blanks.
> illegally maintaining its personal social networking monopoly
"Monopoly" is a term that's fairly overloaded/misunderstood; while in economics refers specifically to a situation where there is a single supplier for a good/service (https://en.wikipedia.org/wiki/Monopoly#Market_structures), in the legal definition "monopoly power" is defined much more loosely, as "the power to control prices or exclude competition" in the US (e.g. https://www.justice.gov/atr/competition-and-monopoly-single-...), and there are complex tests for monopoly power in the EU including >50% market share which I'm less familiar with.
I think common discourse tends to interpret monopoly in the economics sense, which leads to confusion when we look at antitrust enforcement like this. Not to mention that under antitrust laws you don't even need to have (loosely defined) "monopoly power" to be engaging in illegal anticompetitive behaviors.
Specifically analyzing those competitors:
LinkedIn is a business social network, not a personal social network as they define it. Forums are not "social networks" as commonly defined (graph of relationships).
Twitter is a competitor, but they have far less market share, e.g. see https://www.t4.ai/industry/social-media-market-share#:~:text... which puts Facebook at 69% of social media users, (a monopoly in most definitions), while twitter is at ~8%. Somewhat confounding because users can be on both, but the magnitudes are what's important.
TikTok is a valid competitor too, but again they don't have nearly as dominant a position as Facebook <25% of FB's MAU according to https://datareportal.com/social-media-users?rq=tiktok.
I think Ben Thompson has the best analysis of antitrust as it pertains to Facebook, as he deeply understands the market dynamics that give Facebook and other large tech companies their market power, e.g. see https://stratechery.com/2017/manifestos-and-monopolies/.
"Social advertising".
* other companies/entities that can be considered "competitors" (Twitter, TikTok, LinkedIn, etc)
* the acquisitions in question (Instagram and WhatsApp) being approved by the suing entity (namely, the FTC) themselves back in the day
I wouldn't be surprised if an outcome of this were to be say, limits against cross-linking acquisitions together or the like in the future. However, having existing companies be forced to be spun out in their entirely... I have a hard time imagining that being the outcome, given the chilling effect it could have on the rest of the industry.
What would be the precedent if regulatory approvals could be challenged with a change in administration?
That's like someone is approved for a license to own a gun, then that person uses the gun to commit a crime, and then their license is revoked. Then someone points the finger at whoever it was that approved that person for a gun license.
What would be the precedent if a merger approval gave you a free pass to be anti-competitive?
I could see eyebrows being raised around interop work, but I'm not sure about the rest.
What's hilarious is that breakups and divestiture were considered a completely commonplace occurrence up until a generation ago. It was just a matter of course for the FTC and DOJ to deal with companies that had gotten too big or were engaging in questionable behavior and forcing them to break up into pieces.
This, of course, was generally a good thing. Then we just sort of stopped. Now we're at a point where your point of view, which is that this is "hard to imagine" is a completely reasonable one.
It shouldn't be though. The current situation of consolidation at the top of our economy is wildly unstable and harmful to workers, consumers, and fledgeling entrepreneurs alike, and we should never have let it get this out of control.
My pet theory is that the legislature is so divided and incompetent that laws are horribly outdated. The other two branches of government need to compensate. Google v. Oracle is another example of this.
Does that prevent Congress from passing laws criminalizing ongoing behavior by corporations, or just from prosecuting acts from before the law was passed?
It isn't Zuck's fault nobody else is as competitive as Facebook is.... I look at you MySpace and Twitter.
[1] https://www.ftc.gov/news-events/press-releases/2012/08/ftc-c...
"The Federal Trade Commission has closed its nonpublic investigation of Facebook's proposed acquisition of Instagram, Inc., without taking any action. Accordingly, the deal may now proceed as proposed."
"The Commission vote to close the investigation was 5-0."
Something tells me the FTC isn’t going to be amenable to “gotcha” arguments
FTC seems to be arguing that at least part of the reason why that is the case was the employment of illegal tactics by Facebook.
Something about the FB mobile app siphoning off mobile data about other app usage
Social Networks have natural Monopolies.
Not that I believe FB is necessarily a monopoly in the economic sense, but it's not quite right to talk about 'competition' in systems that are designed to have one winner.
If there were 5 Twitters for example, one of them would eventually dominate, one way or another.
Imagine if FB was broken up like old school monopolies. That would definitely open field to a lot of smaller social media startups. I am worried about consumer privacy impacts because it is easier to regulate one giant company than a myriad of smaller ones. Regardless, I say let's do it because monopolies and data stewardship are two separate problems and historically monopoly breakdowns did great things for innovation.
This sounds... incorrect.
Small players are much more vulnerable to fines and other penalties which range from 'cost of doing business' to 'slap on the wrist' for the big guys. And small ones don't seem to have much in the way of lobbying power or other direct influence over regulators.
Maybe more accurate to say that it's a bit harder to police lots of small players, but also that it's only the small players who produce good behaviour under regulation.
In a robust market of smaller players the regulatory agencies can stick to rulemaking, investigation, and enforcement (civil fines/prosecutions), which is what they are great at. Smaller players don't have the resources to compete with the government and force them into regulatory trench warfare.
This is similar to the situation with the IRS — they spend most of their time auditing EITC cases, and other issues related to poor and middle class people. They don't have the resources to collect on the billionaires who have enough power to fight the government to attrition.
Countries win through innovation. It's hard to innovate with such distractions. China must be happy cheering on its tech companies while the US is on the sidelines. Go figure...
The problem is that you simply can not keep up with 100 developers working full time building the same product as you but giving it out for free.
I'd go as far as saying the first 5k of self employed income per year should not be subject to any filing/registration requirements and what registration/regulatory fees and paperwork should be exactly zero for companies with <100 people and <10m in annual revenue. Corporate income taxes too should be no more than 1-2% until >>100 employees and >> 10m annual revenue.
If we want small businesses to thrive and compete with big businesses we need to make it as frictionless as possible.
You don't "cheer on" the fucking global market leader. You force them to allow 3rd parties to leverage their platform for innovative, derivative products.
Facebook has been extremely hostile to any sort of 3rd party integration with their products. Break that shit up.
Really sounds to me lawyers will be at it for very long with no sure outcome.
“Monopolies drive progress because the promise of years or even decades of monopoly profits provides a powerful incentive to innovate. Then monopolies can keep innovating because profits enable them to make the long-term plans and finance the ambitious research projects that firms locked in competition can't dream of.”
Is he right? Looking at FB and Google, I don’t see much innovation on their core products: search and social.
Google’s autocomplete has improved, but in my anecdotal experience the search results have gotten worse. Certainly the UX is the same. Surely there are ways improve on a single list of results beyond a sidebar of knowledge graph information for known entities?
With FB, for all their efforts to tune my feed, I still see the same uninteresting content, even if I do occasionally snooze a “friend” for one too many dank memes. If anything, I see less relevant and compelling posts on my feed than ever before.
And yet I do love what I see from Google and Facebook in their ML research, and Thiel seems right that the massive resources put into those long-term projects only come from monopoly profits.
So it isn’t that a monopoly isn’t innovating, it’s just that they aren’t innovating on the value that is provided to their users. They are innovating on what can make them more money. With having conquered their markets and bought or bullied their competitors, they no longer have to make users happier with a significantly better core product. Instead, making more money requires innovating on their monetization products, or on side-products.
As a monopoly, the biggest risk is taking risks with their core product. But risk is where innovation happens. You might argue that their side-products carry risk, but what risk is there to well-paid well-funded workers on a subsidized side-product whose liquidity depends more on executives’ happiness than users’ happiness? What happens when you are making what capitalists want instead of what users want? If you’re a startup founder with meddling investors, you know what I’m talking about.
So although Thiel’s advice to aim for being a monopoly is relevant for creating a successful startup (in a tautological way), his arguments that monopolies are engines of innovation aren’t convincing.
It seems like "corporate entrapment" to approve a deal and then later sue the company for going through with the deal that you approved. For what it's worth, I'm not fan of Facebook (I'm not employed, don't directly own their stock, and in general do use Facebook products) but this seems kind of absurd to me.
[1] https://www.reuters.com/article/us-facebook-whatsapp/faceboo...
- cross-app communication between Messenger and Instagram
- Messenger API enabling business communication on Instagram
- ad management for Instagram and Facebook through a centralized platform
- WhatsApp business accounts linking to Facebook accounts
- Facebook shopping in-app in WhatsApp
These are all small and there are many more examples, but an overarching theme is to integrate FB's products as much as possible. It's not only to increase adoption and revenue, but also to make them appear inseparable.
I'm sure stuff like these sounded fine in decision maker heads...
On one hand, forcing Facebook to open up its social graph would have serious privacy implications.
On the other, it would provide an incredible boost to any new social network, which could quickly bootstrap off your existing friends. That's what Instagram did with Twitter and what Vine did with Facebook.
The most important feature of a social network has always been whether your friends/family use it. If any new social network can take advantage of Facebook's social graph via API, that neutralizes this advantage. Now Facebook is forced to compete by being a better social network, not just a bigger one.
There shouldn't be much additional privacy concern with a Facebook user saying "I trust user Alice and service example.com, so please send all my posts to alice@example.com using ActivityPub."
Similarly, Alice should be able to tell example.com that she trusts the Facebook user Bob with ID 123456789, so that example.com sends her posts to Facebook addressed to Bob (perhaps authenticated with a pre-shared key that Bob emailed her).
Once users are free to move between providers, those providers can compete based on their level of privacy and security, which right now Facebook has little incentive to improve.
I suppose that a lot of personal data could be gleaned about someone (and their friends) from a rogue ActivityPub node reading the posts that were federated with it, but people would be suspicious if, for example, Mastodon suddenly started asking users for their phone number, Social Security number, and a picture of their driver's license.[1] And people would be very unlikely to sign up to a node which was actually run by Cambridge Analytica, right?[2]
[0] https://www.theguardian.com/news/2018/may/06/cambridge-analy...
[1] https://www.washingtonexaminer.com/opinion/parler-is-not-the...
[2] https://www.techdirt.com/articles/20201116/01141545710/what-...
So, it's worth considering that people might indeed happily sign up for a rogue node that steals their info without knowing what's going on.
2) It's not good when governments swoop in and shut down / mess around with private business in general.
Of all the things the Feds could be doing, putting in privacy protections, Net Neutrality, protecting from scams would be much higher on this list.
Everything that follows is my opinion, as these are clearly questions without objective answers.
Facebook has become a massive force for division and the propagation of hate rhetoric. A lot of that comes from their own algorithms which basically create a catered stream of content to reinforce user's already held beliefs. This is not a FB specific issue, but they are probably the largest offender. I would argue they have been an absolutely massive negative for society.
I a vacuum you'd want private business left alone, but corporate power in America has reached absurd levels, and we desperately need the government to step in and do something. Long gone is the point at which labor organization could function as a counterweight to corporate power (in no small part because of the government going after it, but it doesn't really matter why). The insane consolidation of the economy has been a huge driving force for wage deflation, stagnation of productivity, and wealth inequality.
Question: is there an argument not to split up these gigantic corporations?
Of course, forbidding anti-competitive acquisitions would have helped in that maybe then we'd all be using an independent Instagram under the leadership of its original founders and Facebook would be dying. But that still wouldn't change the fact that it would be more than likely to be a quasi monopoly. That's just the nature of social networks.
While I don't like these monopolistic practices, they have given the US a tremendous amount of power over communications abroad.
These companies are also vulnerable to competition in a fickle market. Tik Tok has gained massive ground and is on a similar trajectory that instagram was on some years ago. For everyone's claiming that FB stifles innovation, we have an obvious counterexample happening literally before our eyes.
It would be quite the twist though if Kevin Systrom testified for the FTC against FB, though.
I think there will be a lot of ancillary benefits from breaking up these organizations that should be welcome to all parts of the political spectrum. Distribution of market power means distribution of financial outcomes as well. It lowers barriers for others to challenge incumbents. It allows companies to decentralize from a few overly-powerful city-states. And so on.
People are still advocating for radical freedom but can also happily support products and companies where users benefit
I imagine there are probably a lot of other services that are shared or interact in some way - maybe shared email/notification services, 2fa services, data analytics/BI, monitoring etc...
Give both companies the ad platform source code.
> Can someone please tell me how Instagram's actual content is worth anything? We're talking about photo-filtered cell phone camera shots here. Facebook doesn't need a user acquisition ploy. I guess maybe it's a move to keep users in Facebook, but I'd be willing to bet a million bucks that almost everyone is discovering Instagram content via Facebook or Twitter. Seems like mostly a huge waste of cash.
Good luck on this one America. I have low expectations but high hopes.
Replicating and building out an ad platform like FBs from zero would be very very hard. None of the other social platforms ad networks are even close in quality but especially interface/targeting/features. Snap / TW I would say are at maybe 5% if I had to pick a number...
Especially especially taking into account integration with FB pixel.
Facebook has been trying to make it appear that integration will make separation impossible.
But the reality is, you simply duplicate the databases and whatever shared services they depend on, and create a "stub" FB backend for IG, and a "stub" IG backend for FB for the shared services to work... and they go on their merry independent ways, while engineers remove things that depend on the stubs at their leisure.
Obviously it's not trivial (and involves the inherent complexities of any datacenter migration), and doing it without downtime is a whole separate beast, but it's not impossible or so wildly difficult it can't be carried out. In other words, there's zero reason it should be a factor in the legal outcome.
At most, there would be an IP issue -- e.g. would the spun-out IG be permitted to have a stubbed FB backend, and vice-versa -- but that's easily solved by providing those permissions as part of the separation agreement, with a timeline to remove them (e.g. 2 years).
* Are customers lives improved by browsing lifestyle photos on Instagram^notFB ?
* WhatsApp makes voice and video calls. How does it affect me that it's part of FB? How is my life improved if its not? Another voice/video app will somehow thrive?
* Opening their APIs so that a couple of startups can build custom FB and Instagram apps? One of them will succeed and the rest will fail. This is the public benefit?
There's such a huge difference between this and Microsoft's anti-competitive case: Microsoft controlled your entire computer. When they restricted apps, they restricted your entire ability to operate your computer, connect to the internet, etc. Here, FB is constraining... your access to social data on FB??
WhatsApp used to have strong guarantees against tracking (and ads) as long as they were independent.
They were wildly profitable and was my favorite messaging service until Facebook bought them.
Now I reluctantly use Telegram, but I'd much rather have something like WhatsApp back were I can pay real money for the service instead of paying with my metadata.
In their case this is 100% obvious that they buy any new dating app in order to keep their monopoly and the result is clearly bad for the users
We need transparency, not this.
How is there not some sort of regulation to allow me to opt-out or configure these algorithms that target me for ads of curated content?
It's my f*cking data!
This will hurt the Valley.
Without sustaining rules there is nothing stopping another fb from coming in the future.
Without rules and without a master roadmap, I can’t see the judge agreeing to this. Like sun tzu said the battle is won before the first shot is fired. And this is a losing battle.
Here is what I think of an ideal future. Platforms need to be separated and service providers need to be separated.
They can be one company but separate management with no influence between each other.
Messaging platforms can be separate with interoperability. As long as management is separate.
Facebook properties are a combination of friend network, share portal, news aggregator portal, ad display, ad filter, messaging platforms, data analyzers. And more than I care to know.
This is too much power under one management.
By splitting platforms from service providers seeking customers on those platforms, and allowing customers to disconnect from those platforms and move to other platforms, a large fracking sound will be heard.
So this means Facebook and Google were hit with lawsuits, when is Apple and Amazon next?
I can even understand the Google lawsuit, but can someone explain to me how is Facebook a monopoly? I find a bigger problem Apple than Facebook. It is Google and Apple that have a death grip on the mobile market...
Can you trick my eyes into focusing on infinity when the actual focus point is three cm away? Maybe?
Can you trick my inner ear into accepting the virtual reality? Ok, how?
AR is a different story, but Oculus would be starting from zero on an AR play, the only company with a genuine head start is Apple.
Interesting that it seems to focus so heavily on acquisitions.
> The complaint also alleges that Facebook, over many years, has imposed anticompetitive conditions on third-party software developers’ access to valuable interconnections to its platform, such as the application programming interfaces (“APIs”) that allow the developers’ apps to interface with Facebook. In particular, Facebook allegedly has made key APIs available to third-party applications only on the condition that they refrain from developing competing functionalities, and from connecting with or promoting other social networking services.
> The complaint alleges that Facebook has enforced these policies by cutting off API access to blunt perceived competitive threats from rival personal social networking services, mobile messaging apps, and other apps with social functionalities. For example, in 2013, Twitter launched the app Vine, which allowed users to shoot and share short video segments. In response, according to the complaint, Facebook shut down the API that would have allowed Vine to access friends via Facebook.
Making API's available "only on the condition that [developers] refrain from developing competing functionalities" is one thing; and I can see how that seems anticompetitive, I dont' know enough about the law to say when anticompetitive is illegal.
But that second one is more interesting. "shut down the API that would have allowed Vine to access friends via Facebook" -- they didn't just not have Vine have access to it, they removed it, and that is being complained about. The implication to me seems to be that facebook must provide certain API's to avoid anticompetitive behavior?
The API I personally most miss and am interested in is Events. My interest is definitely in reducing facebook's lock on users. A lot of people I know find missing out on events the hardest reason to leave facebook, and if an API was available show Facebook events on other platforms, it would definitely aid people in leaving Facebook, which is I presume exactly why Facebook got rid of the API, which sounds pretty similar to the Vine complaint, although I don't know whether there was a specific facebook competitor threatening them with events integration. I would be thrilled if the FTC made Facebook restore an Events API, hopefully in a way that was sufficiently full-featured for the kinds of integrations that would help people get off facebook. ("Help people get off", it sounds like an addiction, yup).
But FB has consistently introduced open APIs and features, let them gain traction, then shut them down and replicated the most popular features.
I have been burned multiple times. Most recently new restrictions on Messaging.
If FB was mandated to restore some APIs possible make new ones for interoperability (while keeping the privacy changes over the years) that would be super super valuable to help other companies make value without trying some fruitless and probably not sound breakup.
Google lost its Adwords case in the EU: using data gathered via the adwords advertising monopoly to support its search monopoly. $1.5bn fine. Google will happily pay this for anything that meaningfully strengthens their position in this market.
Besides the fine, all they have to do is stop doing the specific, narrow "monopolistic behaviour" that prosecutors were able to prove. This just isn't how monopoly works, and modifying some specific behaviour doesn't affect much.
Whack-a-mole is almost pointless. Antitrust is about structure, inherently. If antitrust action doesn't lead to structural changes, I don't see any point in it.
Similar cases will likely be prosecuted against Amazon (and google) in multiple jurisdictions with the adwords case serving as a (very narrow) template for prosecuting data/marketplace monopolism. Hence amazon. We can probably expect a similar result. A cost-of-doing-business fine and some updated policies about sharing data between the marketplace and retail arms.
If prosecutors prove both a monopoly position and monopolistic abuses (it did, and will), this needs to be deemed proof of a broad problem. Other monopolistic abuses need to be assumed. The fix needs to address the problems, known and unknown broadly. For example, by separating the marketplace and participant (adwords & search; amazon marketplace & retail) into seperate businesses.
In this FB case, it's about buying all the competition: whatsapp, instagram, etc. A fine or a policy update don't fix this. Force a sale of these companies. Ban FB from acquiring companies entirely, or social media companies at least.
Ultimately, the regulator has already failed here. Those acquisitions should not have been allowed in the first place.
Antitrust isn't about punishing bad behaviour. It's about dealing with bad structures.
That said, it does feel like antitrust cops are working up to it, gradually.
These are all serving slightly different parts of the market, but the market has TONS of social networks that are entirely outside of FB control. TikTok, Reddit, Twitter, even an ecosystem like google accounts or apple accounts, these all are large competitors to different aspects of what FB offers.
I get it, if I buy the competition, then I'm reducing my competition. If I'm a car wash and I buy another car wash across the street, arguably our services overlap 100%. But maybe the acquired carwash was $4 more expensive and served a more luxury clientele. Is that a competitor or not a competitor or both?
How can you also ever prove that a company being acquired was truly a competitor? What percentage overlap on products and services would be necessary to deem that company a competitor?
My bet is that there is a lack of science here and surplus of qualitative judgment. Educate me please... :)
Just to add - they also say the lawsuit is focusing not just on anticompetitive acquisitions, but anticompetitive practices related to developer access to APIs. Apparently Facebook has been heavy-handed towards developers that sought to use their APIs for any product that might have overlapped with their products. An example is Vine - Vine was apparently blocked from using the Facebook API to share videos or something.
Having a psychographic model is dangerous to social structures, it just makes it far too easy to manipulate those who are easy to manipulate (which, given any topic, is the vast majority of people).
There are no effective defenses against this that I can see.
The trouble is the disconnect between Facebook's apparent business model and what it actually is, although I'll admit this might be conflating who is the real bad guy here.
The business of advertising is behavior manipulation, pure and simple. Nothing about that strikes me as "safe"
So the FB feed exists, but multiple apps can post. Each app consumes the feed and sells advertising to their own platform with FB charging a reasonable fixed interconnect fee.
The Facebook API is already pretty open. That's how we got Cambridge Analytica.
And since when is a company under any obligation to provide its customer list to up and coming competitors? That’s ludicrous.
It’s interesting watching all the ways America tears itself apart.
https://heavy.com/tech/2018/10/facebook-block-minds-com-unse...
If the FTC has their way, Facebook will need to seek prior notice and approval for future mergers and acquisitions.
for your convienience:
Both North Carolina and North Dakota are participating in the suit.
Neither South Carolina nor South Dakota are participating.
(The other two holdouts are Georgia and Alabama).
It obviously worked because neither Microsoft nor IBM is dominant in mobile computing.
This decade is going to be lit.
Yes, the FTC wins lawsuits like this. Not always, but some of the time. And if they win, they can in fact ask for Facebook to be broken up, and get it.
And even if they don't win, Facebook has to take it seriously, which takes time and energy from executives. They have to at least consider the chance that the FTC will win, which means that they might think about a settlement rather than rolling the dice on a trial. How much that settlement changes things depends on how the sides negotiate, which depends (at least in part) on how much confidence each side has that they would win.
Does this suit have enough merit to succeed? I have no idea.
(This comment has nothing to do with Whatsapp and Instagram, just Facebook web)
Not Google with search? Not Apple with their App Store?
Facebook, a company whose products you could completely ignore and not even notice you're missing anything?
Even Bill Gates has cleaned up his reputation, let alone engineers who worked at MS in monopoly days. I don't think anyone that was there at the time is worried about how it reflects on them personally.
It's amazing what a few billion dollars of charitable donations can buy you. This is called "fumigating your fortune".
I'm skeptical there'd be any hard feelings from other global corporations, arguably doing the same thing