Interview with Luigi Zingales: Social Media and Antitrust

Allison Schrager in conversation with Luigi Zingales on the subject of “Break Up Big Tech? A conversation about the future of the industry ”(City Journal website, September 21, 2021).

Zingales makes a number of interesting points, but here’s one of them:

I think the problem is that we are treating big tech as a big issue and saying we need to resolve it. Rather, what we should do depends on what we want to achieve and what sector of the industry we are talking about. Let’s start with social media. I think the government should have tried to stop Facebook’s takeover of Instagram and WhatsApp, but I’m not sure if splitting it would make any difference in the long run. If there are major network externalities, separating Facebook from Instagram would only be a temporary measure as only one of the two will ultimately prevail. …

[T]Here’s one thing I would love to see. Why can’t I have software that monitors both Signal and WhatsApp and can receive and send data to both at the same time? In 2008, a company called Power Ventures did just that, but Facebook sued it and set it up in U.S. courts that if I give you my Facebook credentials and you download data with my consent, it’s a federal crime and should ins Go to jail. I think that’s crazy, and it’s one of the many legal issues that makes solutions difficult. …

We should separate the two key functions of Facebook: sharing information and editing information. Facebook and Twitter allow me to share a photo with anyone who follows me. However, Facebook also decides whether all of my followers will see the picture at the top of their feed, at the bottom or not at all if their feed is clogged with other posts. Facebook can also decide whether my picture is shown to a lot of people I don’t know. …

First we should separate the editorial role from the role of sharing. In the editorial role, where there are no network externalities, we can have competition. I can have an editor from the University of Chicago and another person could have Jacobin as an editor. Newspapers can redefine their role as editors. I could subscribe to the Wall Street Journal editorial selection services: The Wall Street Journal would edit the articles or tweets I want to read and select them from the Internet. For example, I hate it when people talk about their lives on Twitter; others love that. There should be free competition to curate these information feeds.

In contrast, the sharing function (which benefits from network externalities) should be viewed as a common carrier with the limitations typical of a common carrier, including universal service. Everyone should be allowed to post on Facebook unless they break the law. Likewise, Facebook’s sharing function is to be protected from legal liability, but not the editorial function. …

Consider a telephone company. Do you know how many crimes are committed over the phone? Are the phone companies responsible for this? You could eavesdrop on any conversation, but no one would consider that option. Unlike telephone companies, Facebook, Twitter, and YouTube promote the content posted on their networks. I recently wanted to watch a YouTube video of Noam Chomsky and immediately got all of these recommendations for this weird TV channel. When I started researching, I found that it came from Venezuela. Venezuela has a very radical left-wing broadcaster that broadcasts in English for the American market. YouTube touts the channel and makes money promoting it because it wants viewers like me to be as committed to their service as possible. And the way to keep ourselves busy is to give us more and more radical things that keep us stimulating more and more. The problem isn’t social media; It’s the business model that is supposed to make people addicted to platforms.

I’m not entirely convinced by Zingales’ claim that social media sharing has an impact on external network effects, while editorial decisions about what to promote don’t. There is also some irony in that a previous round of complaints against social media was that they cannibalized newspapers and other journalism by distributing their content without paying the original publishers. Well, the suggestion is that social media sites should be required to curate and share their content with others?

But I think it makes sense to think specifically about what we want to achieve by applying antitrust rules to social media. Just saying “sic ’em” is not a worthy public order motivation. For example, is the goal for a more competitive online advertising market? Or to protect the privacy of individual data? Or are there questions about how these companies select the content to promote and how do they promote it that raise anti-competitive or other political issues? What part of a social media company is more like a phone call where you simply pass on what someone is saying, and which part involves the company’s strategy and decisions?

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