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Harold Miguel Baco
ECON 110-C
Individual Paper #2

The Social-Media Monopoly

Introduction

“Competition is always a good thing. It forces us to do our best. A monopoly renders

people complacent and satisfied with mediocrity.” - Nancy Pearcey

Growing up, hearing the word “monopoly” reminded me of GO signs, chance cards,
community chests, and whatnot. It always excited me to be able to strategize and plan out
how I wanted to purchase different assets based on the location of the board. The goal of the
game was basically to render your opponents bankrupt and ensure that you had no
competition left by acquiring all the properties in the game. Little did I know that my favorite
board game was a manifestation of a reality we live in today – markets being owned by the
biggest companies possessed by the richest people in the world. But what is a monopoly in the
first place? Why is the quote in support of competition?

To answer this question, a monopoly is “a dominant position of an industry or a sector

by one company, to the point of excluding all other viable competitors.” (Hayes). In this type
of market, there is only one main seller with little to no close substitutes. It exists for various
reasons, one of which is a high barrier to entry – because the company has so much control
over the market, “competitors are unable to break” into it. This leads to increased consumer
expenses, inferior goods and services, and unethical corporate methods from monopolistic
businesses. Examples of these firms include Google, Microsoft, AT&T, and different oil and
railroad companies. In a time period where technology has continuously evolved to where it is
today, one other company has stood out in the digital environment and has garnered roughly 3
billion users under its community – the social-media giant, Facebook.

The Facebook Monopoly

As of June 2022, Facebook has taken over 75% of the social media market share
globally. The big tech company is ranked #27 in Forbes 500, with revenues of $118 billion
and profits of $40 billion in 2021. (Forbes). Since 2009, it started dominating the digital scene
as it became the most used social networking site in the world through its active users. (Nair).
However, despite the massive growth that the company has experienced, the public was
finally made aware of its inappropriate practices that have helped them grow into the giant
they are today. More specifically, the abuse of their monopolistic power in terms of privacy
breaches and anticompetitive behavior.
Privacy Breaches

There have been many allegations about Facebook and how it has used information
from the public to further grow its business and maintain at the top of the social networking
ladder. It’s obvious by now how most commercial sites collect their consumer’s information
to display content and recommendations that are catered to them. In the past, Facebook was
able to uncover this to their users by presenting an “ad preferences” page that explicitly
showed how they categorized their interests to create the feature. However, when a survey
was conducted on how much Americans understood the amount of information being taken
out of them on Facebook, it was discovered that 74% of the userbase didn’t know that the
application maintained their information. In addition to that, half of the respondents said that
they weren’t comfortable with how Facebook had compiled their data in that way. (Hitlin).

This wasn’t the only time where a breach of privacy had occurred. One of the more
well-known and recent incidents happened in 2018. The Federal Trade Commission (FTC)
opened an investigation on Facebook due to an incident that occurred in 2014 when the
company was reported for illegally harvesting data from its users. An online quiz was released
in which Facebook users took part to find out their personality types. Not only did the app
record information from those who answered the test, but it also gathered data from their
connections such as their friends – totaling a number of 87 million people.

Some of their responses were then passed and sold to Cambridge Analytica, which
was then used to “psychologically profile voters in the US”. Because of this, Facebook was
then fined “£500,000 by the UK's data protection watchdog”. Right after the incident was
publicized by the media, Mark Zuckerberg published an apology which states that the
company “was reviewing its technical systems to identify… possible privacy risks would
need to be addressed.” in the future. (BBC)

Anticompetitive Behavior

Other than the privacy breaches, one of the more well-known strategies that Facebook
used to stay on top of the ladder was by engaging in illegal monopolization tactics by
purchasing innovative competitors in the market.
 Figure 1: The Facebook Acquisition Timeline

One of the reasons why Facebook started this acquisition spree was because
“Facebook lacked the business acumen and technical talent to survive the transition to
mobile”, which is why they started to illegally buy out these companies in order to prevent
any threats from taking over their monopoly. Examples of these companies are Instagram and
Whatsapp, which were already starting to thrive in the mobile environment on their own until
Facebook bought their companies for $1 billion and $19 billion respectively.

Because of their anticompetitive conduct and monopolization of the market,

“Facebook’s actions have suppressed innovation and product quality improvements. And they
have degraded the social network experience, subjecting users to lower levels of privacy and
data protections and more intrusive ads.” (FTC). Such actions are the very consequences of a
monopoly market wherein its products and services aren’t of standard quality. In order to fix
this, the FTC filed a complaint against Facebook in their current antitrust case to control the
company’s monopolization of the market.

Downfall of Facebook

With Facebook having been filed for lawsuits, investigations, complaints, and
whatnot, it’s difficult to see how the company’s future will play out. When Facebook had its
internal documents leaked to the public, it was ultimately seen how the monopoly was starting
to lose its ground to its competitors. “​​According to the documents, Facebook is alarmed by
how fast its pipeline of new users is drying up. The use of the Facebook app by young adults
is expected to drop 4% in the next two years, and a 45% decline among teens.” Even the users
of Instagram, a company under Facebook, are switching to applications such as Tiktok and
Snapchat, which were said to have better privacy regulations than Facebook. (Bork).

Opinion

I’ve had a Facebook account for 12 years now, and I’ve seen it grow along the way to
the monopoly it is today. Although what I’ve noticed recently is that Facebook isn’t as
exciting as it was before. The application would always be my go-to when I was growing up,
and I’d easily get joyful scrolling through my news feed and finding random videos and
content that would make my day.

Although things changed as I grew. While social media platforms are basically part of
my life now, I realized how repetitive the algorithm is on Facebook, and how I easily get
bored after a few minutes of scrolling. I’d rather go on Tiktok, where the content that is being
recommended to me is always changing and interesting. Not only that, but I’d also feel safer
on Tiktok due to its privacy regulations compared to Facebook, knowing all the allegations
they’ve had in the past. When it comes to messaging, I’d prefer using Telegram instead of
Messenger because they have features that are better than the latter; it’s also faster and more
reliable.

Despite my current preferences, Facebook will always be as powerful as it is now. One

of the characteristics of a monopoly is that since it controls most of the market share,
consumers cannot escape and must put up with the monopolist’s actions. Together with this,
the users are forced to tolerate the substandard quality of their services. One of the things that
Facebook should prioritize even more would be the increase in misinformation across social
media.

Over 3 billion people have access to Facebook, which means that the same number of
people are prone to accessing false information on their social media pages. This is when I
realized how much of a giant the company is and how it has abused its monopoly power too
much. The effects of their monopoly had created large-scale issues that have changed the
course of an entire country. What Facebook has offered to the public during these times is a
ton of misinformation that has affected people’s votes in elections.

In order for a monopoly to be regulated, there should be a creation of a regulation

agency and an intervention from the government. In that case, it’s time that the U.S
government should intervene with the company that is Facebook. While there already have
been cases and lawsuits against the firm, not much impact has been done besides paying fines
and endless apologies from the board of directors. Facebook has been constantly causing
inefficiencies not only within the social media market but even in society itself.

With that being said, I also wonder what the Metaverse would look like in the future.
Personally, I do agree with an article on Intelligencer that states “Mark Zuckerberg and
Facebook are not innovators. The only thing they’ve innovated around is their core product,
Facebook, which a lot of people would argue was stolen in the first place.” (Walsh). One of
the problems of Facebook is their ability to innovate for their platforms. This is why they
opted to buy out their competitors instead of creating new ideas to grow their company even
more.

I believe that the idea of having a fully digital world through Oculus VR/AR is quite a
stretch for a company like Meta. I cannot imagine how it would play out. “I get a text
message from my friend and I’m at the mall, or a movie, or at school. Am I going to pull out
my handy Oculus and throw it on my head and start jamming to the Weeknd? It doesn’t make
any sense.” (Walsh). When it comes to the technology industry, I’d say Apple would have the
upper hand in making that dream of a Metaverse into a reality. Although one thing I’ve
learned about monopolies is that of their monopoly power. With the control they have over the
market, it’s always uncertain how their plans of making a Metaverse will happen because we
as consumers have no choice but to put up with their actions.
 Sources

Bork Jr., Robert H. “Opinion | 'Monopoly' Facebook Is Losing Ground.” The Wall Street
Journal, Dow Jones & Company, 31 Oct. 2021,
https://www.wsj.com/articles/monopoly-facebook-is-losing-ground-social-media-antitru
st-children-ftc-khan-wu-ibm-11635706822.

“Facebook to Pay Record $5bn to Settle Privacy Concerns.” BBC News, BBC, 24 July 2019,
https://www.bbc.com/news/business-49099364.

“FTC Alleges Facebook Resorted to Illegal Buy-or-Bury Scheme to Crush Competition after
String of Failed Attempts to Innovate.” Federal Trade Commission, 27 Jan. 2022,
https://www.ftc.gov/news-events/news/press-releases/2021/08/ftc-alleges-facebook-reso
rted-illegal-buy-or-bury-scheme-crush-competition-after-string-failed.

“FTC Sues Facebook for Illegal Monopolization.” Federal Trade Commission, 18 Mar. 2021,
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Hayes, Adam. “What Is a Monopoly?” Investopedia, Investopedia, 10 Mar. 2022,

https://www.investopedia.com/terms/m/monopoly.asp.

Hitlin, Paul, et al. “Facebook Algorithms and Personal Data.” Pew Research Center: Internet,
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Morse, Jack. “Facebook's 'Monopoly Power' Hurts User Privacy, Finds Congress.” Mashable,
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Staff, Fortune. “Meta Platforms: 2022 Fortune 500.” Fortune, Fortune, 12 June 2022,
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Intelligencer, 8 Nov. 2021,
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Weinstein, Mark. “Opinion | I Changed My Mind-Facebook Is a Monopoly.” The Wall Street
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