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Thursday, February 25, 2021

Let markets, not antitrust laws, punish Big Tech’s political discrimination

Market competition, not antitrust regulation, is the best way to reduce the political discrimination taking place as Big Tech companies monopolize news and communication.

The simultaneous and coordinated actions of Big Tech against microblogging platform Parler are obviously politically motivated. Facebook, YouTube, and Twitter have been used to inspire and mobilize many riots since they started, both abroad and at home. That includes the Jan. 6 Capitol riot, those throughout the summer of 2020, and beyond.

There will always be inexcusable behavior by “bad apples” on any platform, and strong and fair efforts should be applied to eliminate any illegal behavior. However, in the country that virtually invented free speech, big businesses are discriminating on the basis of users’ political opinions.

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Twitter’s new competitor, Parler, has as an overall guiding principle to let its users, rather than company management, decide how members of their platform are treated. This is important because social media platforms differ from traditional news outlets in that consumers themselves, not management, decide what issues are discussed.

Parler also differs from Twitter and Facebook by not intervening and “shadow banning,” “fact-checking,” or censoring users and by providing greater privacy, allowing members to control their own data, and having consumer juries dictate policy. Other things constant, many users would find that these features raise the intrinsic quality of a social media site.

Any monopoly will fight back vigorously when a new competitor comes along with a better product. Protecting a lower-quality monopoly is easier for social media platforms, as the value of the product rises concurrently as more people use it. Economists call this added value of size “network effects.” You need the “social” to make social media valuable. Therefore, Twitter’s monopoly makes pushes demand toward Twitter, despite its being an inherently lower-quality product.

This network effect and the simultaneous withdrawal of Parler’s services by major technology vendors has led to cries for government antitrust intervention, as opposed to new competition to lessen the monopoly power. However, there are several reasons to favor competition over an antitrust response.

First, officials in charge of enabling an antitrust push have and will have political campaigns funded by the incumbent monopolies, and the regulators will be staffed with alumni from the incumbent firms. That makes it an unreliable option.

Second, the incumbent Twitter’s own actions have pushed tens of millions of its own customers onto the competing platform. Though the president is not on Parler, both he, who was kicked off Twitter, and Rush Limbaugh, who left voluntarily, had more than 80 million followers, making up a large share of domestic demand. Others who are voluntarily leaving add to the self-inflicted demand reduction. The potential financial losses to shareholders from management’s political discrimination may turn out to be large and may lead to legal action.

Third, regulators always have trouble keeping up with industry. Remember when the Justice Department accused Microsoft of maintaining a monopoly in personal computer operating systems? At the time, up to 95% of PCs powered by Intel processors were running a Microsoft operating system. Just as the judge was ordering a breakup, Apple and other competitors were already getting ready to release new products that would push Microsoft into the background without government assistance.

Finally, the outcry against the collusive action of Big Tech has effectively amounted to a free international advertising campaign for Parler and those discriminated against, making the brand a household name very quickly without any expense. Once up and running again, this donation will be valuable.

One may argue that this time is different because the Big Tech collusion against the new competitor Parler makes it impossible for the new entrant even to compete. But incumbents always try to raise the costs of rivals. The demand for free speech seems too large to be overcome by this temporary “cost increase.”

Indeed, it is certainly conceivable that free capital will be provided through donations to Parler rather than through costlier traditional funding rounds. Once servers are up, using a phone to sign up or log on through a browser rather than a temporarily banned app is an entry barrier that can be handled. Many highly profitable websites have apps that get banned but thrive anyway.

The government could get out of the way of new competition by repealing Section 230 of the Communications Decency Act. This section allows social media companies to pick and choose speech on their platforms without the responsibilities that a traditional publisher has. It’s particularly attractive for the major social media companies, which cannot be held liable for any political discrimination. “Rewriting” Section 230 is a bad idea because the incumbent businesses, which have lavished politicians with donations, will really be doing the writing.

Historically, consumers have been better off relying on competition rather than lagging regulators to deliver less market concentration. Although many people are concerned by the collusion between Big Tech companies, the monopolization of news, and the political discrimination both have brought about, policy should be focused on facilitating and delivering competitive relief.

Casey B. Mulligan and Tomas J. Philipson are both economists at the University of Chicago. Both served on the White House Council of Economic Advisers, Mulligan as chief economist from 2018 to 2019 and Philipson as member and acting chairman from 2017 to 2020. Mulligan’s new book You’re Hired! Untold Successes and Failures of a Populist President details President Trump’s quest to cut federal regulation.



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