Tom Temin Commentary

Anti-trust tech suits: Deja vu

Google-Facebook suit leads to road we've been down before

Tom Temin@tteminWFED

September 12, 2019 12:02 pm

3 min read

I bought my first thing as a result of an ad on Facebook the other day. It took 10 days for the (disappointing) $30 item to arrive. In the meantime I’ve gotten maybe 50 subsequent emails from the vendor with amazing discount coupons for products I don’t want. Like a set of ear studs featuring tiny skulls.

Not really an enthusiastic Facebook user, I nevertheless have an account and look at my timeline occasionally. I post something two or three times a year. As Mr. Rogers said, won’t you be my friend? So it’s a testimony to the depth of Internet plumbing that Facebook managed to serve up a relevant ad during the five minutes I was looking.

Now the Justice Department and the Federal Trade Commission are looking at whether the current set of internet giants — Facebook included — are committing anti-trust violations because of their dominance in digital advertising. Several states’ attorneys general have filed lawsuits. Some of the traditional media giants, harmed by the decrease in advertiser spending on their properties, have been weighing in in favor of a finding of anti-trust abuses.

Outside of the sheer revenues of Facebook and Google, the cases get technical with respect to the way these platforms allegedly crowd out others, and whether their terms and conditions constitute anti-competitiveness.

These types of cases can have useful outcomes, even if the decisions are not ones any of the parties expects or anticipates. The messy antitrust case against Microsoft that spanned two centuries didn’t save Netscape nor break up Microsoft. But since then the browser market has remained a competitive area, even to the point of Microsoft using Chromium open source software for its Edge browser.

The long view shows that — conditionally on maintenance of a vibrant, free economy — time and technology have a way of washing away monopolies. Or single-vendor dominance if there’s no monopoly.

It seems as long ago as Charlemagne, but the Great IBM anti-trust suit — lasting 13 years until 1982 and 30 million pages of documents — ended when the Justice Department withdrew. The PC, minicomputers, Unix and several other factors totally transformed the computing market. A decade later IBM was in dire straits and had to revolutionize its own business model.

By contrast, the 1982 AT&T consent degree helped — but in my opinion didn’t totally bring about — a revolution in telecommunications that’s still unfolding. The biggest innovations in telecom until then had been the Princess phone and touch-tone.

As for plain market dominance in the absence of monopoly, here’s a word for the millennials: Blackberry. Here’s another: Palm.

Google and Facebook are essentially advertising media. The free products they produce can be beneficial. But while you might be a user, you’re also the food for advertisers. Somehow, and I have no idea what the mechanism will be, the seemingly insurmountable dominance of those and a few other companies will fade.

At a business magazine editors’ conference many years ago, the speaker was AOL’s Ted Leonsis. Publishers were anxious to know what the internet meant for them. This was after they got over worrying about the CD-ROM revolution. Leonsis remarked to the effect, and let this sink in, “Well, AOL is the internet.”