Reining in the power of big tech companies, including major social networks, is an idea with growing bipartisan support in Washington. Much of the debate so far has revolved around the idea of breaking up companies such as Facebook to limit their reach and influence. But such “structural remedies” require a difficult and costly court battle, and history shows that they can take a decade or more to play out.
Based on comments during last week’s tech antitrust hearing in the House Judiciary Committee, it now seems possible that a more surgical approach will ultimately win the day.
If one factor explains the competition problem in social media, it’s network effects. The more members a social network onboards, the more valuable the platform becomes. After all, when all your friends and family are already on Facebook, you may feel the need to become a member in order to stay in the loop. And you might also end up spending far less time on other networks. This makes a tough road for all those Facebook alternatives out there.
If past judgements such as U.S. v. Microsoft are a guide, U.S. courts don’t smile on big companies that get a competitive advantage simply by being big. One way to mitigate Facebook’s network effects would be to make it less (socially) costly for people to stay on smaller, competitive networks. That’s why the concepts of portability and interoperability are so important.
Data portability proponents say that just as your phone number is portable when you switch from one carrier to another, your social identity and social content should be portable if you want to move to another competing social network.
They also say that just as it’s easy for an AT&T Wireless customer to call a T-Mobile customer–because the networks are interoperable–social network users should be able to share content across networks. For example, it should be easy for a Facebook user to share social content with a friend on LinkedIn.
Plenty of precedent
These aren’t new concepts. As a way of giving new cellular carriers a fighting chance, the Federal Communications Commission in 1996 mandated that consumers be able to take their phone number with them from a wireline carrier to a wireless carrier, or vice versa.
Regulators have required interoperability several times in the past. In the 1980s, the FCC required that competitive local telecommunications carriers share their networks with other carriers, and that local carriers connect calls to whatever long distance service customers wanted to use.
Back in 2002, the FCC approved the merger of AOL and Time Warner on the condition that AOL make its AIM messenger able to trade messages with Yahoo!, MSN Messenger, and other instant messengers. It did so and AIM’s market share fell from 65 percent before the merger to 59 percent one year later, and then to just over 50 percent three years after that.
A similar approach could be used to improve competition in the social networking space.
In fact the ACCESS Act, introduced last year by Senators Mark Warner (D-Va.), Richard Blumenthal (D-Conn.), and Josh Hawley (R-Mo.), provides a good start. The bill, which is still waiting for a proper reading in the Senate, defines three basic kinds of social content that should be shared across competing social networks. These include basic social networking content (text posts, likes), messages (such as Facebook Messenger), and rich media such as photos or video.
Sinan Aral, director of MIT’s Initiative on the Digital Economy, is a long-time advocate for social network interoperability. “People always ask me the same thing: ‘isn’t that a really hard engineering challenge?’,” Aral says. His answer, in a word, is no. “These tech platforms have solved engineering challenges a hundred times harder than this one,” Aral told me.
Social companies would be required to maintain a standards-based set of formats that would work on any platform.
“You would have five to seven standard messaging formats,” Aral says. “And you would use APIs to be able to exchange the messages from one platform to another.” He says the social companies could still create new and innovative message types that would be more proprietary, but they would be required to maintain a standards-based set of formats that would work on any platform. Aral dedicates a chapter of his book, The Hype Machine, to the subjects of portability and interoperability.
Warner, Hawley, and Blumenthal’s ACCESS Act directs an office of the government to develop interoperability standards for social, media, and messaging content to move across social media platforms. “[T]he Director of the National Institute of Standards and Technology shall develop and publish model technical standards by which to make interoperable popular classes of communications or information services,” the law reads.
A social standards body
But another expert, Tad Lipsky of the Global Antitrust Institute, told the House Judiciary Committee that the Congress or one of the agencies may not need to write the interoperability standards themselves but rather let the industry do it. “Perhaps this is someplace where a standards development organization should be thought of [to] give the private sector a chance to establish the basic principles,” Lipsky said, “and then Congress can step in to the extent that the result is not satisfactory.”
In fact, a number of big tech companies including Facebook, Google, Microsoft, Twitter, and Apple have already set up something called the Data Transfer Project to develop data portability standards. The group aims to “develop interoperable systems that allow individuals to transfer their data seamlessly between online service providers.”
MIT’s Aral is skeptical. “There’s a difference between being part of a consortium and actually getting [standards] done,” he says. He believes the companies have little incentive to do so, since interoperability would diminish the network effects the companies currently enjoy.
So, Aral says, a standards body could be effective if there was legislation mandating its formation and eventual results. He adds that such a group could continuously update its standards based on the participants’ vantage point on new social content formats coming into and going out of vogue.
Because of its “grow at any cost” ethos, massive advertising business, and keen understanding of network effects, Facebook, at 17 years old, is now worth more than $800 billion. Now the company is the target of the biggest antitrust lawsuit in the history of the tech industry, filed in late 2020 by the Federal Trade Commission and 46 state attorneys general. The suit asks the court to require Facebook to divest itself of Instagram and WhatsApp, and also to expand access to its social networking platform for smaller social media players.
The suit is likely to be ongoing by the time of the next presidential election. In the nearer term, Congress must determine if legislative remedies such as portability and interoperability mandates are enough, or if those should be seen as just one part of a solution that also includes breaking up Facebook.