| Hey all, it's Kurt.A judge dismissed the U.S. government's lawsuit against Facebook Inc.'s monopoly tactics this week, and his reasoning was pretty simple: Regulators failed to prove, with data, that Facebook has a dominant share of the social networking market. The Federal Trade Commission's "inability to offer any indication of the metric(s) or method(s) it used to calculate Facebook's market share" makes its argument "too speculative and conclusory to go forward," U.S. District Judge James Boasberg wrote in an opinion. The FTC can resubmit its lawsuit over the next 30 days, he added, but I'm not sure it will matter. Proving Facebook's popularity is easy. But proving that Facebook's popularity is monopolistic, or represents a dominant market share, might be impossible. Defining the social networking market, and then finding the right metric to measure it, are both really difficult. What is "social networking" in 2021? It's tough to say because the idea of social media has expanded tremendously since Facebook's creation way back in 2004. "The whole definition of social media is a snake pit," said Lee Rainie, who studies internet and technology at Pew Research Center. Facebook offers social networking, but it also offers video entertainment, shopping, games and private chats, making it difficult to identify a clear market the company dominates. Rainie knows from his research that consumers, too, don't always agree on what constitutes as "social networking." It's hard to blame them. In Apple Inc.'s App Store, TikTok is nestled under the "entertainment" category, while Twitter self-identifies as "news." Google's YouTube, which reaches even more U.S. adults than Facebook, according to data from Pew, falls under the "photo and video" category, as does Snapchat. While none of these apps are "social networking," Facebook competes with all of them for our attention. Even if regulators could categorize exactly where Facebook operates, measuring its market dominance is nearly impossible under the current system. Consumer technology companies have always defined and self-reported their growth metrics. "There is no common standard," Rainie said. "It's sort of the Wild West for different measurement schemes." Most companies report their overall user numbers, but there is no way to know how many people use multiple services. A study from App Annie from December 2020, which was commissioned by Facebook, found that 90% of the people who use one of Facebook's apps also use YouTube, and 25% also use Twitter. Other metrics that might be useful for determining market dominance—like minutes spent on the apps or total user interactions—are not regularly reported. Facebook doesn't even report its total users for Instagram, WhatsApp or Facebook Messenger anymore. When it does report its U.S. user base, it includes Canadian users in the metric as well. Twitter, meanwhile, reports its U.S. users as a separate number, while Snapchat reports a broader "North America" category. They are essentially impossible to compare. Perhaps the next step in this process should be a national measurement standard, with companies forced to report metrics under the same general rules and guidelines. Of course, that would take much longer than 30 days, but at least it would begin to capture Facebook's power. In the meantime, the FTC has to invent something. "The agency may be able to 'cure [these] deficiencies,'" Boasberg wrote of the lawsuit. "Whether and how the agency chooses to do so is up to it." —Kurt Wagner | 
Post a Comment