Facebook and the future of antitrust

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I just did not wanted to pass this month to remark on recent events on competition and antitrust in the internet services. I like this quote from Hal Varian “You cannot run out of html”. It shows that internet is a very contestable market, but on the other hand, AI, big data and APIs could difficult access to monetization. Would regulation stop the power of the internet? We need to double check on that. Mexican Antitrust Agency (COFECE) will face its first test on the investigation of vertical conducts on e-commerce platforms, and Telecom Regulator will be discussing net neutrality. I spent two years analyzing whether Government should regulate open source, and I am thrilled, because the future of the antitrust could be in the markdown.

Last April 10, Mark Zuckerberg held a Congress Hearing, and talked about monopoly, competition and national champions. The complete transcript can be found here at the Washington Post , but below is a transcription of the relevant parts of the conversation with Senator Graham.

HEARING

“… GRAHAM: … Who’s your biggest competitor?

GRAHAM: I’m not talking about categories. I’m talking about, is there real competition you face? Because car companies face a lot of competition. If they make a defective car, it gets out in the world, people stop buying that car; they buy another one.

Is there an alternative to Facebook in the private sector?

ZUCKERBERG: Yes, Senator. The average American uses eight different apps to communicate with their friends and stay in touch with people …

ZUCKERBERG: … ranging from texting apps, to email, to …

GRAHAM: … is the same service you provide?

ZUCKERBERG: Well, we provide a number of different services.

GRAHAM: Is Twitter the same as what you do?

ZUCKERBERG: It overlaps with a portion of what we do.

GRAHAM: You don’t think you have a monopoly?

ZUCKERBERG: It certainly doesn’t feel like that to me.

GRAHAM: Okay.

(LAUGHTER)

So it doesn’t. So, Instagram — you bought Instagram. Why did you buy Instagram?

ZUCKERBERG: Because they were very talented app developers who were making good use of our platform and understood our values.

GRAHAM: It is a good business decision. My point is that one way to regulate a company is through competition, through government regulation. Here’s the question that all of us got to answer: What do we tell our constituents, given what’s happened here, why we should let you self-regulate?

What would you tell people in South Carolina, that given all of the things we’ve just discovered here, it’s a good idea for us to rely upon you to regulate your own business practices?

ZUCKERBERG: Well, senator, my position is not that there should be no regulation.

GRAHAM: Okay.

ZUCKERBERG: I think the Internet is increasingly …

(CROSSTALK)

GRAHAM: You embrace regulation?

ZUCKERBERG: I think the real question, as the Internet becomes more important in people’s lives, is what is the right regulation, not whether there should be or not.

… and of course, some of his notes got into the media. Here is the link of Tech Crunch . I take them with a grain of salt, and you should, too.

NOTES:

“Competition:

Consumer choice: consumers have lots of choice over how they spend their time

Small part of ad market: advertisers have choices too – $650 billion market, we have 6%

Break up FB? US tech companies key asset for America, break up stregthens Chinese companies.”

Last April 19, Makan Delrahim, head of the Justice Department’s antitrust division, said to be watching closely tech platforms. Here is the from Bloomberg, and below an excerpt:

“Antitrust enforcers may need to take a close look to see whether competition is suffering and consumers are losing out on new innovations as a result of misdeeds by a monopoly incumbent.”

Photo Credit: www.bigstock.com / Bangkok Thailand – June 17 2015 : Unidentified human finger touch on ‘Facebook’ button for share the news on the internet website to his or her owner Facebook feed

About the author

Alberto Esenaro

I am a Mexican lawyer with experience in technology, energy, automotive, infrastructure and business. Worked for law firms, international companies and Government bodies on business advice, regulatory compliance and litigation. Follow me at https://mx.linkedin.com/in/albertoesenaro or https://twitter.com/DoBusinessMX

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About Author

Alberto Esenaro

I am a Mexican lawyer with experience in technology, energy, automotive, infrastructure and business. Worked for law firms, international companies and Government bodies on business advice, regulatory compliance and litigation. Follow me at https://mx.linkedin.com/in/albertoesenaro or https://twitter.com/DoBusinessMX

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