Is Facebook one of the pure monopoly examples?
If so, this social media giant is breaking U.S. law.
At the time of this writing, Facebook is under attack by the Federal Trade Commission (FTC), Attorney Generals of 48 states, and Apple Computer’s Tim Cook.
In early December 2020, a class action suit was filed against Facebook.
This post seeks to explain the situation and how you will be affected if Facebook loses the lawsuit.
There are actually precedents in place since other companies have also been accused of being pure monopoly examples in the past and in violation of U.S. law. This article explains those situations as well.
The companies that found themselves targets of lawsuits are Facebook, Microsoft, Google, and Amazon.
According to Vox, Amazon is also one of the pure monopoly examples and therefore is vulnerable to criminal prosecution.
By the time you are done reading, you will know why there are accusations against the four companies, the definition of a pure monopoly example, why being one of the pure monopoly examples breaks the law, and why I am qualified to report on this situation.
Let’s dive in and learn more about why there are accusations of criminal behavior against Facebook, Microsoft, Google, and Amazon.
My qualifications to report on pure monopoly examples:
Am I a constitutional lawyer?
However, I am a social studies teacher.
I teach about the Sherman Anti-Trust Law, the law Facebook is accused of breaking.
The Sherman Anti-Trust Act is a law that guarantees pure monopoly examples are illegal in the United States.
What are Pure Monopoly Examples?
According to this source from an educational institution, “Pure monopoly exists when a single firm is the sole producer of a product for which there are no close substitutes.”
The source repeats the criteria for which these four big companies are being accused of being pure monopoly examples: “Unique product: no close substitutes for the firm’s product.”
Since Facebook is in control over Facebook, Instagram, and WhatsApp, the FTC is alleging that Facebook is the sole producer of social media for “which there are no close substitutes.”
Are These Companies Pure Monopoly Examples?
There are many advantages of Facebook. However, the FTC and 48 U.S. Attorney Generals claim there is not enough competition for social media platforms.
Consider: One-third of the planet currently uses Facebook which boasts two billion users. Facebook’s user base is as big as China and India combined (Source).
Facebook owns WhatsApp and Instagram. Facebook tried unsuccessfully to purchase Snapchat too.
Related Reading: What are the negatives of Instagram?
Consider more staggering statistics: Instagram has one billion users, so Facebook owns platforms that three billion people use, that’s half the planet.
Facebook owns WhatsApp as well which has an additional user base of two billion people according to these 2021 statistics.
Related Reading: Here you will find more information about WhatsApp blog concerns.
The suit alleges there is not enough competition among social media platforms, and therefore Facebook has a monopoly.
What is the Sherman Anti-Trust Law?
Having a monopoly is illegal in the United States. According to U.S. law, there has to be competition for consumers.
The Sherman Anti-Trust Law exists to make sure there is competition. By the way, this law applies to competition anywhere, not just on the internet.
Why do Anti-Trust Laws exit?
- Companies need to play fair.
- No company should control the market.
- There must be competition for consumers’ resources.
- Competition keeps prices affordable.
- People need choice.
Why is Facebook accused of being one of the pure monopoly examples?
By controlling three social media platforms, the FTC claims there is not enough competition against Facebook, and therefore Facebook is one of the pure monopoly examples.
Apparently, the FTC does not like the way Facebook acquired its holdings, Instagram and WhatsApp, and attempted to acquire Snapchat.
What damages is the suit seeking against Facebook?
The FTC and the 48 Attorney Generals are demanding Facebook sell its holdings, Instagram and WhatsApp, to competitors.
The Atlantic agrees with the class action suit.
“Facebook decided that it needed not just a very large user base, but a tremendous one, unprecedented in size. That decision set Facebook on a path to escape velocity, to a tipping point where it can harm society just by existing.
No single machine should be able to control the fate of the world’s population.”
The publication goes on to observe that “perhaps a federal antitrust lawsuit” would have helped.
What is Facebook’s defense?
Facebook is using three claims to defend itself from the suit:
First, there are other popular social media sites like TikTok for consumers of social media to use.
In fact, MeWe’s Mark Weinstein insists his social media platform, MeWe, is a Facebook alternative. Therefore, Weinstein maintains, Facebook doesn’t have to sell its holdings.
Next, Zuckerberg claims he made Instagram the popular site it is today. This is a relevant defense.
Zuckerberg is being told to sell Instagram. Due to its overwhelming popularity with one billion users, Facebook is told there isn’t enough competition against a site he made popular. Competition is required if you’re not considered one of the pure monopoly examples.
Clearly, this is speculation. No one knows what the extent of Instagram’s popularity would be if Facebook had not purchased it.
Third, the FTC initially approved Facebook’s purchases of Instagram and WhatsApp.
Here you will find more information about Mark Zuckerberg and Facebook’s holdings.
Is it ironic that Facebook is finding itself the subject of accusations when the site has levied accusations against so many Facebook users and put them in Facebook Jail?
How will you be affected if Facebook loses the lawsuit?
If you are worried that you won’t be able to use Facebook anymore, rest assured. Even if Facebook must sell Instagram and WhatsApp, you can still use Facebook.
Will you still be able to use Instagram and WhatsApp if Facebook loses the suit?
Yes, absolutely! However, they would be owned by someone else; therefore, management decisions would be made by new people.
In 1998, Microsoft was accused of being one of the pure monopoly examples and faced Anti-Trust charges.
As with the Facebook suit, Attorney Generals joined to make this a class action suit.
Microsoft was sued by the Department of Justice and lost. The company appealed and lost once again.
Instead of being forced to sell to competitors, so Microsoft would no longer have a monopoly, Microsoft agreed to share component computer parts with competitors (Source).
Google is also being accused of being one of the pure monopoly examples.
According to NPR.org,
“On November 20, the Department of Justice announced they had filed a suit in federal court accusing Google of illegally maintaining its monopoly over search. The Google of today is a monopoly gatekeeper for the internet, and one of the wealthiest companies on the planet.”
In other words, the DOJ believes Google is one of the pure monopoly examples. As an “internet gatekeeper,” there is not sufficient competition.
Are there enough Google alternatives for Google to avoid being considered one of the pure monopoly examples? Not according to the U.S. Department of Justice there aren’t.
The Atlantic agrees with the concerns about Google also being one of the pure monopoly examples.
“The giants of the social web—Facebook and its subsidiary Instagram; Google and its subsidiary YouTube; and, to a lesser extent, Twitter—have achieved success by being dogmatically value-neutral in their pursuit of what I’ll call megascale.”
To avoid being considered one of the pure monopoly examples, there must be competition in your industry.
Does Amazon have competition in the world of ecommerce?
Since 40% of online sales go to Amazon, there is concern that Amazon is “anti-competition (Source).”
Apple Vs Facebook
The members of the FTC and 48 U.S. Attorney Generals are not the only people upset with Facebook.
CEO and Facebook Founder Mark Zuckerberg is having a pretty public war with Apple’s Tim Cook.
Apple is also mad at Facebook. Apple’s Tim Cook wants people to opt in to having their data sold. Facebook objects complaining the idea will hurt the small business owner.
Wrapping Up: Are These 4 Websites Pure Monopoly Examples?
This post reviewed four situations in which federal regulators insist there is an economic imbalance.
I based the information on these situations on my knowledge of the Sherman Anti-Trust Act and my research for this article.
Since lawmakers feel there is a prejudice in favor of Facebook, Microsoft, Google, and Amazon, the sites are told they are anti-competition and therefore in violation of U.S. law.
Do you feel Facebook and these other sites are pure monopoly examples?
In your opinion, should Facebook be forced to sell Instagram and WhatsApp?
Readers, please share, so users of Facebook, Microsoft, Google, and Amazon learn of these situations and how they could potentially be affected by the outcomes of the lawsuits involving these big companies accused of being pure monopoly examples.
Janice Wald is the founder of MostlyBlogging.com. She is an ebook author, blogger, blogging coach, blogging judge, freelance writer, and speaker. She was nominated as the 2021 and 2019 Best Internet Marketer by the Infinity Blog Awards and in 2017 as the Most Informative Blogger by the London Bloggers Bash. She’s been featured on Small Business Trends, the Huffington Post, and Lifehack.