Rethinking Remedies for the Attention Economy
35 Pages Posted: 11 May 2021 Last revised: 2 Sep 2021
Date Written: May 10, 2021
Social media networks make their services freely available to all users. Users pay for the service received with the time and attention taken by the advertisements. This paper argues that social media platforms are a unique form of monopoly driven by “the more the merrier” effect (i.e., network effects) in users’ consumption. These monopolies exercise market power, not by charging higher prices to users, but by “tying” larger amounts of advertising to their content. Traditional antitrust instruments designed to address excessive pricing and reduced output by monopolies need to be reframed to tame the attention economy problems in the social media industry. This paper discusses five antitrust instruments grouped in three categories: structural, behavioral, and market-based remedies. Market-based solutions are the least explored in the literature, despite being the most promising instruments to lower the attention costs imposed on users, while preserving the economies of scope in production and the network effects in consumption, and possibly maintaining free access to social media, as we know it today.
Keywords: Zero-Price Markets, Attention Economy, Social Media Networks
JEL Classification: K21, L10, D40
Suggested Citation: Suggested Citation