Everyone knows that Facebook has acted irresponsibly with its users’ data, and people are upset. Politicians want to punish Facebook for its actions. Even Chris Hughes, the cofounder of Facebook, has advocated breaking up the company. That’s how bad things have become. But I’m not convinced Facebook should be broken up. Clearly, Facebook needs to be regulated, but breaking it up won’t solve all the problems.
The fact is that all social networks, as they exist today, are pseudo-monopolies. Facebook has managed to purchase Instagram and Whatsapp, giving it a clear dominant position in the US and many other markets. Even if you broke Facebook, Instagram and WhatsApp into three separate companies, you’d still have three pseudo-monopolies, none of which may do a better job at protecting users data and the public’s interests.
The fact is that users cannot simply switch to a new social network. They are locked in. No one wants to leave their friends behind. And without friends, a social network is useless. So competition will always be limited. Read More...