Facebook has been around for a long time. It’s cool. However, until recent times it had continued to attract active users. The seemingly inexorable growth of Facebook prompted the U.S. government’s intervention to “breakup” Facebook and create new laws targeting it.
Facebook is dangerous as it’s a MONOPOLY, with unparalleled power and communication. It must be stopped,” Missouri Republican Senator Josh Hawley said. tweeted. Sen. Elizabeth Warren claimsThis is the “Anyone who uses the internet will know that Facebook holds monopoly power. This is why we need to have stronger antitrust laws. #BreakUpBigTech.” It has been widely adopted (even in the USA). Teen VogueNow, Facebook declares “Facebook is an monopoly”) and asserts that no new competition can challenge it.
Federal Trade Commission states that it is difficult for newcomers to replace an existing personal social network, in which members’ family and friends are already involved.
These arguments started gaining political traction at a funny time—just as Facebook started shedding U.S. users (with the drop especially steep among young people) and a new social network started rising. The chip inside Facebook’s armor was another indication that intervening is not necessary to stop its endless growth.
That chip is growing. The company announced last week in its earnings report that the daily user base had fallen. GlobalIn late 2021. It lost half a million users per day in the final three months.
Facebook also said on a call about the earnings report that Apple’s new App Tracking Transparency feature, meant to protect iPhone user privacy, could reduce Facebook revenue to the tune of $10 billion this year.
Meta stock plummeted by approximately a quarter due to the news, as did Meta’s market capitalization. plunging from nearly $900 billion to around $660 billion. “Meta was less valuable than Microsoft” Bloomberg reported last Saturday.
It is appropriate to invoke Microsoft. Politicians and regulators became a little obsessed in the 1990s with the notion that Microsoft had an unfair monopoly on various areas of web browsing and computing. The long-running legal battle between Congress and the feds saw Congress use antitrust law in an attempt to stop Microsoft’s dominance of computing and to break it up.
The government’s case against Microsoft failed at this task—but dynamism didn’t. Microsoft’s market share, power, and prestige diminished as other companies—like Apple and Google—proved better at adapting to, making, and marketing useful new technologies.
Facebook’s fate has been predicted for quite some time. Young people don’t use it. All ages are frustrated by it. Facebook’s initial appeal was its network effects (often, when you sign up for Facebook, your entire Facebook friends are there!). It started to fall apart. Did you really need to find out what your junior-high English teacher thought about Farmville? Or how your third-cousin feels about Trump? The site was constantly changing, making it frustrating for both regular users (separating messenger into an independent app), and publishers (whose ever-shifting algorithm and content policies made it impossible to see user eyes). A series of highly publicized content moderation decisions were able to persuade almost every American faction in politics and culture that they are against the site.
Facebook saw some significant expansion with the acquisition of Instagram and WhatsApp. Many politicians want Facebook to be forcibly disintegrated. But, time and again, other new business lines or products—like its recent wade into cryptocurrency—have failed. It was also a total failure to try and compete with established businesses, such as Foursquare or Gmail.
It is ridiculous to think that Facebook can be saved through the “metaverse”. We’ve been here before—see virtual reality games in the ’90s, Second Life circa 2007 (or 2015), and the buzz around augmented reality porn and headsets like Oculus Rift and Google Glass last decade. Although virtual reality sounds interesting, people are still hyping the idea as the next big thing.
Facebook’s single revenue stream, and its business model make it vulnerable. Meta is 98% responsible for digital advertising revenue. 81% are also dependent on it. [Google parent company]Parmy Olson, a Bloomberg columnist earlier this month noted that Alphabet is his. Although the digital advertising model is a solid bet, it doesn’t necessarily mean that it will always be. Olson writes that the rate of ad growth is slowing down and that “an end or strong growth often signifies an end to dominance,” especially if there’s no backup.
This all suggests that Facebook cannot be the social media king for ever. TikTok has made this more evident.
TikTok is growing like crazy as Facebook loses users. It reached one billion users worldwide last year, up from 55million in 2018. It has grown from 11.3 million users to 100 million users in the U.S. in 2018, where it was launched, in 2017. According to Kepios, it now boasts 120.8 million adult users in the U.S.
TikTok was also the top-visited site on the internet last year.
TikTok may be the best argument against claims that Facebook has a monopoly on social media services—something the Federal Trade Commission has been arguing in court.
A judge dismissed the FTC’s complaint last June because it failed to adequately allege Facebook was a monopoly. The court allowed the FTC to resubmit its complaint and a judge decided that the amended complaint can be filed. However, this does not necessarily mean the court agrees to the FTC’s monopoly claims. It only means that the FTC did not submit an amended complaint. These are some examplesIt was a weak case. The government now has to back up the monopoly claim.
The government should be concerned about Facebook’s declining numbers and its value as well as TikTok’s rise to prominence. It shouldn’t be expected to reduce enthusiasm among Congress members for changing antitrust law. This battle was not based on realistic assessments of competition and consumer harm. It’s driven instead by animosity towards big tech from both sides as well as big business from the left. They want to amend antitrust laws to restrain, punish or profit off big corporations.
Realistically, political leaders would see that the Facebook era has already ended. That’s because trends, markets, and technological dynamism all work in this way. Nothing can stay the hot new thing—or even the old and omnipresent thing that appeals to Everyone—forever.
Facebook remains a giant, but it still has some way to go before it ceases to exist (if ever). We shouldn’t start writing eulogies just yet, I assure you. But the U.S. ( European Union) antitrust push against Facebook and other big tech companies assumes—and often explicitly argues—that Facebook’s power is permanent and its market share irreversible. Recent developments andAncient history shows that this is not true.