Invigorating Competition in Social Networking: An Interoperability Remedy that Addresses Data Network Effects and Privacy Concerns

12 Pages Posted: 9 Jan 2021 Last revised: 5 May 2021

See all articles by Cristian Santesteban

Cristian Santesteban

RedPeak Economics Consulting; University of Washington - Department of Economics; Stanford University - Department of Economics

Shayne Longpre

Apple

Date Written: April 30, 2021

Abstract

The persistent dominance of Facebook has led many scholars and policymakers to generate
proposals to invigorate competition in social networking. In this piece we address a remedy that
has received renewed attention: interoperability. Prior proposals of interoperability have focused
on eroding entry barriers that exist due to user-based network effects. We focus here on
data-generated network effects: the more data Facebook acquires from its users, the more its AI
algorithms can learn and improve the content Facebook provides its users. Without access to a
rich stream of user data, a social network is merely a static interface, with limited capacity to
serve engaging or personalized content. As such, we propose a version of interoperability that
addresses both user and data-driven network effects. In doing so, we also explicitly tackle the
privacy issues that invariably arise whenever data is shared across firms.

Keywords: Antitrust, Interoperability, Privacy, Digital Platforms, Social Networking, Competition, Tech, Economics

JEL Classification: K2

Suggested Citation

Santesteban, Cristian and Longpre, Shayne, Invigorating Competition in Social Networking: An Interoperability Remedy that Addresses Data Network Effects and Privacy Concerns (April 30, 2021). Available at SSRN: https://ssrn.com/abstract=3733851 or http://dx.doi.org/10.2139/ssrn.3733851

Cristian Santesteban (Contact Author)

RedPeak Economics Consulting ( email )

Seattle, WA 98102
United States

University of Washington - Department of Economics ( email )

Box 353330
Seattle, WA 98195-3330
United States

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
STANFORD, CA 94305-6072
United States

Shayne Longpre

Apple ( email )

1 Infinite Loop
Cupertino, CA 95014
United States

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