There’s over a hundred and twenty year of antitrust law that says that conduct is improper if it leads to higher prices for consumers. Why does Yale insist that antitrust can apply when prices are 0?
Why does Yale insist that antitrust can apply when prices are 0?
"Consumers" on Facebook are ad buyers, not users. Prices aren't 0 - Facebook's revenue was $70bn in 2019. That comes from businesses buy ads. Everything Facebook does to dominate the social media space is about selling more ads for more money. That's why they buy competitors, shut down rivals, and aggressively do what they can to drive prices for the ads on their platforms up.
If we’re focusing on ad buyers instead of users, then why isn’t the relevant market just all “advertising companies” (instead of social media companies)? When you compare Facebook to other advertising companies, their market share dwindles. Google holds the advertising throne.
Price in this case is calculated by the amount of Ads you have to see, the effect on mental health because of Facebook's physiological experiments on its users, Facebook not obeying laws of smaller countries where it operates in, Facebook not paying taxes in other countries, owning Instagram - effectively the second largest competitor to Facebook is also owned by Facebook, too late to take anti discriminately actions for ads (if they were smaller and feared a boycott, they would take earlier precautions) etc.
We need to look beyond the "Price = 0" narrative when we're investigating things that in this new era are free.
A competitor is not defined by doing the same thing (for which you can always find a distinction), but by competing for the same customer resources.
Facebook used to only have text, and people linked to pictures on (mostly) Flickr. And then MZ realized 80% of Facebook posts Link to pictures on outside websites. That’s competition for ad placement; so FB added picture storage, albums, etc. same with Videos.
The customers, advertisers, previously had Flickr as an option. Now they don’t. That’s not a coincidence. And that’s not even illegal on FB’s part as long as they aren’t a monopoly - but now they are.
The Yale paper wants it both ways. If any app with friends/follows is a competitor then there’s plenty of competitors and the acquisition didn’t substantially reduce competition. Yet if only products similar to Facebook are considered competitors then they’ve never acquired a competitor.
Facebook didn’t have any adverts before it had them. Neither did google, or for that matter cable TV.
Unless you have inside knowledge about Instagram’s business plans, it is reasonable to assume they would have had ads sooner or later, as no other monetization scheme seems sustainable for this kind of “product”.
The nipping of competition in the bud does not make it any less anti competitive.
I was under the impression that it didn't in the early days in the US. For sure, in several other countries, it started without ads, and some channels stayed ad-free whereas others did get ads and getting more of them (though, nothing quite as horrible as what the US has these days -- on a recent visit to New York, my kids tried to watch Cartoon Network on the Hotel Television, and it was probably 30% ads -- never seen anything remotely close to that in UK, Germany and other countries I visit)
One of the early nationally available cable tv channels was TBS. They always had ads. Besides the original purpose of cable was to transmit network TV in remote areas.
"Consumers" on Facebook are ad buyers, not users. Prices aren't 0 - Facebook's revenue was $70bn in 2019. That comes from businesses buy ads. Everything Facebook does to dominate the social media space is about selling more ads for more money. That's why they buy competitors, shut down rivals, and aggressively do what they can to drive prices for the ads on their platforms up.