Today, we frequently hear the line that the social media “giants” of our time have a “monopolistic” hold over the market. These murmurings have sparked the interests of regulators, who in turn would like to rein in the influence of such companies.
But are these supposed giants of our day truly monopolistic? Looking at consumer behavior, buying patterns and the companies’ own behaviors, it’s clear they are not.
Let’s start with a new study from the Pew Research Center surveying today’s teens (age 13-17) and their use of social media, compared with those who were teens in 2014-2015. Researchers found that teen use of newer brands like TikTok, Instagram and Snapchat significantly outpaced use of Facebook, Twitter and Reddit. The percentage of teens using Facebook dropped from 71% in 2015 to a mere 32% today, with a similar decrease between generations using Twitter. And the most dominant platform by far for teens today is YouTube, which 95% of today’s teens report using, and nearly 1-in-5 teens say they use YouTube “almost constantly.”
Mark Jamison of the American Enterprise Institute notes in a blog that Pew’s study contradicts the Federal Trade Commission’s antitrust cases against Meta. “Facebook, the service that made Meta great, is performing dismally according to Pew…It is hard to legitimately argue that a company is a monopoly when it is rapidly losing customers to rivals,” he writes.
Modern teens are less interested in social media of the previous generation and are finding new platforms that cater better to their preferences in getting and obtaining information.
Speaking of finding information, even the search wars are heating up. While Amazon and Google still dominate the search market for adults, some folks are now turning to TikTok first for product searches and research. This is more than double the rate of those using Instagram and Reddit. And not surprisingly, this trend is most pronounced among young shoppers below the age of 34. This trend must be concerning to Google: less than a quarter of Gen-Z now turns to them first for search.
What message does the Pew survey send us about public policy? To start, buyers have options. In a market dominated by a company with “monopoly power” (the courts usually consider this around 75% of market share), the question is then whether that company has acted in a way that harms consumers.
With this understanding, it gets harder to say there’s a monopoly in how people use online platforms. Today, consumers have more options than ever to access information, and they are choosing those platforms which they find to be most reliable and helpful for their goals. In the early 2000’s, the same political commentators were crying “wolf” about how MySpace was an unassailable monopoly. There are countless examples of these talking points over the last 30 years, including Yahoo! and AoL in their heyday, as Ryan Bourne of the Cato Institute detailed in a 2019 study.
But as we saw back then and are seeing now, consumer preferences and goals change. Because they have so many options to choose from instead of today’s leading platforms, they are able to freely add or switch online services – without government intervention.
How these platforms behave in the marketplace is also notable. Traditional monopolies don’t typically work so hard to innovate, reinvent themselves and reduce prices. However, each of these targeted companies have massive departments dedicated to innovation and improvement. Meta launched a massive rebrand to reorient towards its long-term goal of creating a virtual-reality “Metaverse.” Amazon tried investing in the health services market. And Instagram, which is owned by Meta, is fervently tweaking its algorithm to compete with TikTok, even to its own users’ frustrations. Creative destruction is alive and well.
As Alden Abbott of the Mercatus Center best summarizes, “The assertion that American competition is declining lacks merit.”
Politicians like to throw around dramatic phrases that energize their voters. But don’t be mistaken: they are misusing economic terms to consolidate government power over American businesses. Letting customers decide and adjust according to their preferences is much quicker and more effective at incentivizing companies to become better and smarter.