How To Stop Social Media Monopolies
The article above talks about Facebook’s positive network externalities make them monopolies, and how we might approach reducing the risk of monopoly power. It relates to the topics of network effects as externalities and the rich-get-richer model covered in the course.
Network externalities refer to the phenomenon by which a person’s choice of using good A over good B has a direct, positive impact on another person’s preferences for that good. This is true of social networks like Facebook. If someone chooses to use Facebook over MySpace, Facebook becomes more valuable to another person making the same choice, since there is now one additional person on Facebook. The authors argue that this structure is inherently monopolistic and tend towards high market shares. This is similar to the effect of the rich-get-richer model. Lack of competition results in lack of choice, and as a result, lack of freedom.
Instead of a direct regulation of market power for a solution, the authors propose a property rights approach. Similar to the rights of cell phone owners in most countries, the cellphone number belongs to the customer and not the service provider. The authors explain how the same can be possible in the realm of social networks. If ownership of digital information and connections (Social Graph) created on a social network is reassigned to the user that created it, competition can be restored. For example, the possibility of someone signing into a competitor of Facebook and rerouting all their friend’s messages and content on Facebook to this new network will make them more likely to try out different social networks.
Is this happening today? There are several apps that reroute information from different social media platforms. TimeHop for example, scrapes information from one’s Facebook, Instagram, Snapchat, Twitter, Photos etc and creates daily memories of that day in past years. However apps like these are regulated to cut off any competitive threats – they often require directly signing into the existing social network platforms, and their features are limited to very niche capabilities. The authors argue that a Social Graph Portability movement is the way forward to restoring competition in the social network space.