Facebook may not be a monopoly, but on the other hand, that's not a necessary condition for antitrust laws to kick in. A dominant position on the market is enough.
A non story. Facebook is doing what Facebook ought to be doing. Monopoly is not a bad thing when no one’s rights are being violated. The next innovation will come from someplace other than social media.
They are natural monopolies. It’s no accident that each vertical has only a single viable option. Network effects result in Facebook remaining dominant in the “connect to the people in your life” market for the same reason that they result in eBay remaining dominant in the collectibles market.
Luckily, there are laws against monopolies. I don't see what you mean by Facebook currently having a monopoly, because Facebook is not the only social network.
Given the fact one of their main competitors is Valve, I don't think you have to worry about them destroying their competition financially either. Facebook isn't even really competing with them, FB is going for the low end market.
Social networks are natural monopolies with one winner taking 80-90% of the market. Before Facebook it was MySpace before that it was Friendster. If Facebook whithered away for some reason the new thing would also tend towards capturing the entire market. It's the reason why Facebook tries to buy any new upstarts, if an upstart gains traction it can become threatening even to the largest social network.
It's different because Facebook has captured nearly every American adult and they have a Google-like (in search) dominance over social. There's no news platform in US history that has ever come even remotely close to being able to claim that. They're just about worth more than every US media company combined, their reach and financial power are already incredible; four years from now they'll be as profitable as Google is today and their reach will likely have expanded further.
I can't see a scenario where Facebook manages to avoid anti-trust action against it in the next four to six years, both in Europe and the US.
Building another Facebook isn’t hard, but the network effect makes it almost impossible. Then they have their acquisition team to ensure that anything that does make it through doesn’t last long. The idea that they’re out there competing on their own merits is silly.
I think that’s one of the big differences - they have a monopoly on the means of production (the userbase), which is less ephemeral than say owning all the steel plants and mines.
Well, to be fair, there are digital product marketplaces that are still essentially monopolies (DriveThru, Kindle). I doubt Facebook is going to take over those markets any time soon.
Which is pretty plausible, right? (Becoming co-dominant with google).
The other thing to consider is the competitive/strategic landscape. It's not so much that the market 'assumes' that Facebook will invent new ways of making money, but rather that regardless of who figures it out, facebook is so incredibly well positioned at the moment (ubiquitous social network) as to give it a large competitive advantage, and let it eat other companies' lunch.
The market has examples of other similarly well-positioned companies, like Microsoft in the early 90s, to draw on.
This reminds me of when Palm bought Be Inc. Everyone thought Palm would start using BeOS instead of Palm OS 5, but really Palm just wanted the patents. So my guess here is, if Facebook really does make a purchase, it will to acquire intellectual property as either patents or evidence of "prior art".
Certainly what makes Facebook valuable is their huge network which is sustained, I think, through barriers to entry (network effect), and barriers to switching (owning your data).
I wonder what might happen, if it could happen that the EU or US FTC mandates api access into and out of Facebook, perhaps after a decision that 2015 Man will use social networking as a needed public infrastructure, to be provided on a common carrier like basis.
Can the sheer size of Facebook's network trigger monopoly break up? Or the sheer size combined with lack of API access?
Successful social businesses have a big moat in the form of network effects. If it were any easier to cross the social-networking moat, Facebook would not have paid $19 billion for Whatsapp. Attracting and retaining users is hard.
I know of multiple ways of trying to estimate the magnitude of network effects. All come up with social networks creating O(n log(n)) value for users. If true, that result demonstrates that network effects are significant, but a better competitor does not have to have nearly the scale you'd think to be able to compete head on against the big giants.
That said, I wouldn't recommend going head to head versus FB for your next startup. But there will be no shortage of future companies posing a threat to FB like the one that FB posed to MySpace before it. And like MySpace posed to Friendster earlier on.
Let's be honest. FB has a lot of advantages here. They are the first mover, they have a ton of resources, and they have appropriate levels of paranoia about this issue. But still I'd give them substantially less than even odds of being the social king when, say, 2030 rolls around.
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