Lina Khan’s Theory on Facebook’s Antitrust Case Takes Form
If federal judge James Boasberg dismissed the Federal Trade Commission’s antitrust lawsuit against Facebook in June, he gave the agency a fair go. specific instructions how it is saved. The problem, he wrote in his opinion, is that the FTC has not provided even the slightest evidence that Facebook is a monopoly, beyond the vague claim that “remains a dominant segment of the personal social networking market. in the United States (more than 60 percent). ” As Boasberg said, it’s incomprehensible to leave some key questions unanswered, such as: 60 percent of what? Who makes up the remaining 40 percent? It’s a bit like accusing a driver of speeding without mentioning the speed limit.
In order to return to court and advance to the next stage of the hearing, the FTC must come back with something much more specific. That proved to be an interesting early assignment for Lina Khan, who is confirmed as commissioner of the agency just two weeks before Boasberg released his verdict. (Facebook wants Khan to return to the case based on his public criticism of big tech companies prior to his current job, even if experts see little chance of success.)
On Thursday, the FTC filed a revised complaint that answers unanswered questions. Even if it is impossible to predict how a judge will rule, the new material probably satisfied Boasberg and kept the case alive. “In my view, they wrote the Boasberg itch,” said Paul Swanson, an antitrust attorney in Denver. Facebook, he said, could not avoid “a long slog of document productions and deposits.”
To prove that Facebook is a monopoly for legal purposes, the FTC does not have to show that it is literally just a social network. They need to show that it has “market power.” In short, gaining market power means facing so little competition that you can do things your customers don’t want without losing any business. This is one of the main reasons antitrust law exists: When there isn’t enough competition, companies stop trying to please their customers and start trying to coerce them. Imagine how upsetting it would be if your internet provider raised prices and you found out no one else was serving your neighborhood. That’s market power.
There are two ways to demonstrate market power: indirect evidence and direct evidence. Indirect evidence often refers to the dominant market segment. (That may be the opposite, but the reason not directly because self-aggrandizement does not prove that a company is doing anything wrong-it only raises the strong possibility.) In the initial complaint, the FTC provided only indirect evidence, and it was small: the weak 60 percent statistic, ruled by Boasberg is not enough. On the other hand, the updated complaint, has details on the market share. Drawing on data from analytics company Comscore – which, the complaint says, Facebook itself is trusted – the FTC argues that any way you cut it, Facebook controls a dominant chunk of the market for “personal social networking services. ” According to Comscore data, Facebook has more than 80 percent of hours spent since 2011, at least 70 percent daily active users, and at least 65 percent monthly active users.
The new complaint also tightens the FTC’s definition of the market itself, which is another important part in any case of monopoly. You cannot prove that a company has market power without explaining which market has market power. sa. According to the agency, the market for personal social networking services has three reasons: First, a network should “build a social graph that maps the connections between users and their friends, family , and other personal connections. ” Second, they need to have features so that users can communicate with each other in a “shared social space,” such as a news feed or group. Third, it should allow users to see each other. (Think about how you can find someone by name on Facebook, but not iMessage.)