It’s Time To Break Up That Fearsome Monopoly Called …. MySpace

I&I Editorial

What? You don’t know what MySpace is?

Just 12 years ago, it was considered a giant, unstoppable social media monopoly that required government intervention to protect consumers.

That year, in fact, Victor Keegan wrote a column in the Guardian newspaper with this headline “Will MySpace ever lose its monopoly?”

In it, he says that “as the MySpace generation goes into employment, (it) could eventually extend (Rupert) Murdoch’s influence in ways that would make his grip on satellite television seem parochial.”

Around the same time, John Barrett, writing in Tech News World, declared that “MySpace Is a Natural Monopoly. “

“MySpace looks like a natural monopoly and, judging from usage patterns, certainly appears to be behaving like a natural monopoly,” he wrote. “Other sites will be condemned to niche markets and subsets.”

Also that year, LiveUniverse filed charges against MySpace, claiming that it violated the Sherman Act by monopolizing and attempting to monopolize the market for Internet-based social networking sites, and the market for advertising on such sites. 

It wasn’t long after these warnings that MySpace became an also-ran in the social media scene after losing out to Facebook. In fact, less than three years after it was declared a “natural monopoly,” the company had to lay off half its staff.

Today, we’re hearing the same warnings about Facebook from today’s crop of Democratic presidential hopefuls. Sen. Elizabeth Warren promises to “break it up.” 

“As these companies have grown larger and more powerful, they have used their resources and control over the way we use the Internet to squash small businesses and innovation, and substitute their own financial interests for the broader interests of the American people,” Warren said in a statement. 

Kamal Harris says it requires “serious regulation.”

Meanwhile, there are those on the right who’ve been talking up regulating Facebook over the charges that it’s biased against conservatives.

The problem is that, by the time politicians get around to worrying about a company getting “too big,” it starts to lose its power and influence.

Those who weren’t born yesterday will remember that the Elizabeth Warren’s of the 1990s were making similar pronouncements about Microsoft. Critics of the company insisted that, unless it were broken up, the tech world would never be free from its grip.

Today, Microsoft’s browser, the central focus of the Clinton administration’s antitrust case against the company, has a minuscule share of the U.S. market, behind both Chrome and Safari.

AOL was also once a feared would-be monopolist. When it merged with Time Warner in 1999, the Federal Trade Commission fretted that “The anti-competitive effects of this merger will harm consumers.”

For those who don’t follow such things, AOL is now a small piece of Verizon, and Time Warner has been swallowed up by AT&T (another former monpolist now struggling for market share). 

That’s not to say that Facebook, Amazon and Google aren’t massive companies. But to describe them as impenetrable monopolies that can only be brought down by government force is to ignore the long history of “creative destruction” that is a constant threat to companies in a free market. 

Facebook itself has become largely irrelevant to the younger generation of social media users. In fact, we’re now seeing stories about how its user base is dying off, and that within a few decades dead Facebook accounts will outnumber the living.

Worse, government efforts to “rein in” supposed monopolists usually end up perpetuating them. Large incumbent firms can easily absorb the cost of regulations, and have the manpower to manipulate the rules to their advantage. Which is why Facebook is now graciously inviting the government to regulate it.

Don’t be surprised if, in a decade or so, today’s headlines about Facebook, Amazon, Google and the rest look as comically wrong as those warnings about MySpace. Unless, that is, the government steps in to “protect” consumers from them. 

— Written by John Merline

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