Antitrust and Social Networking

Abstract:     
IBM. ATT. Microsoft. Intel. IBM (redux). Google. Twitter. Facebook. All are present or former leaders in key high-tech sectors. These firms also all have been the subject of serious antitrust scrutiny over the past three decades. All have been referred to at different times as “monopolies” in the colloquial sense, and in the more technical antitrust sense, and have been the target of public and private investigations and/or litigation relating to monopolization, attempted monopolization, or the abuse of a dominant position in the United States, the European Union, the EU member states, and other jurisdictions.

The goal of this essay is to focus on social networking sites as the most recent locus of these competition concerns and to create a framework to analyze the competition law concerns of social network sites. It may well be too early to definitively resolve the many antitrust issues in this rapidly evolving market, but it is not too soon to define the issues and analyze the way they will be resolved as antitrust law undertakes its traditional role of defining and limiting the abuse of market power in key high-tech industries. I also seek to create a framework to understand and evaluate from an antitrust perspective continuing issues of network effects, essential facilities, infrastructure, and their application to social network sites and related software platforms, taking into account the added complication that most of the markets in question do not currently charge consumers and exhibit features of what economists call two-sided markets. I conclude not with a call to action, but with more of a checklist of which competition law issues matter most and which represent the greatest antitrust risks faced by the current market leader Facebook as social networking continuing to evolve and grow in importance.

Number of Pages in PDF File: 34

Keywords: antitrust, social networking, web 2.0, internet, internet search, Google, Microsoft, Facebook, privacy, monopolization, attempted monopolization, abuse of dominance, software, infrastructure, essential facilities, relevant market, market power

JEL Classification: B1, B2, C11, D4, K21, K42, L1, L4

Accepted Paper Series