Today, Public Knowledge sent letters urging the Federal Trade Commission, the Department of Justice, House Judiciary, and state attorneys general to evaluate whether Facebook’s past acquisitions and what appear to be anti-competitive practices violate antitrust law.
To assist with any investigation, Public Knowledge recommends the antitrust enforcers give full consideration to a new research paper by Professor Fiona Scott Morton of the Yale School of Management and David Dinielli of the Omidyar Network. The paper argues that Facebook may have engaged in anticompetitive behavior by purchasing potential competitors; preventing competitors from transferring friend lists from Facebook or crossposting content originating from Facebook; and by making it difficult for users to understand Facebook’s opaque privacy practices. The report also asserts that lack of competition has enabled Facebook to reduce publisher revenue, increase advertising prices, and lower the quality of its social media platform to users — including by diminishing user privacy.
If the enforcers find that facts support the concerns outlined in this paper, we believe such conduct would warrant filing a monopolization case. The analysis provided in this paper should serve as a guide to what a comprehensive antitrust case against Facebook might look like.
The following is an excerpt from the letter:
“It seems clear that Facebook has market power in the social network market in the U.S. Facebook has a high market share and benefits from significant barriers to entry, [including] very strong network effects… [which] make it hard for a new social network to gain users. Users will be understandably reluctant to join a new network if few of their connections are on the novel platform and they can’t reach connections on the dominant platform.
“As a result of this [and other] conduct, it appears that consumers, publishers, and advertisers have been harmed. While it is difficult to prove what would have happened if Facebook had not acquired and excluded firms such as Instagram and Twitter respectively, the threat of competition would have forced Facebook and others to innovate and fight to compete, potentially creating more creative products and services for the public. This means consumers and publishers have been left with lower quality products, while advertisers pay more. If the Commission finds that facts support the concerns outlined in this paper, we believe such conduct would warrant an antitrust case.”
You may view the FTC letter as well as the research paper, “Roadmap for an Antitrust Case Against Facebook,” for more information. You may view the previous paper, “Roadmap for a Digital Advertising Monopolization Case Against Google,” to learn more about Google’s potential antitrust violations.
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