The outage of Facebook, Whatsapp, and Instagram once again raised the issue of a one-company monopoly. All these 3 social networking sites have billions of users around the globe. Instagram and Whatsapp are owned by Facebook. This outage for 6 hours raised the concern of dependency of one firm by a big chunk of the global population.
Facebook has already been dealing with monopoly accusations and it has been under the scanner of the Antitrust Laws. The US government and other countries with a high number of users and power have the responsibility to prevent global corporations from gaining a ruthless monopoly. As per the US government, Facebook is gaining a social media monopoly.
The issue was raised before this in December 2020, Facebook has been accused of buying its rivals. This act has been viewed as an attempt to gain a monopoly by reducing competition. The take over of Instagram and Whatsapp reduced competition for Facebook and increased profits of the overall firm. The Antitrust Lawsuit against Facebook was an attempt to compel it to unwind the decision of Whatsapp and Instagram Takeover. However, Facebook has denied the claims and alleged them to be “Relentless criticism”. Even though whatever shall be the result of this case, it will have a big impact on the investors and stock market. It will also determine how social media will take form in the future.
What are Antitrust laws?
Antitrust laws are made by the governments to protect the customers from hunting business practices and to assure fair competition. These laws are also called competition laws to secure fair competition in the case of open economies. They protect against the drawbacks of a liberal and open economy.
These laws have developed with time, actively guarding against the monopoly obstacles in the production flow and flow of competition. These laws are applied to various business practices like market allocation, bid riding, price-fixing, monopoly, etc. In absence of these laws, customers will not gain profits from varieties in the open economy and options in the market. At the same time, they will be forced to pay high rates with access to a restricted supply of goods.
What is the significance of Antitrust laws?
Several countries have extensive laws that secure the consumers and regulate how companies will operate their businesses. The objective behind these laws was to give an equal playing field for identical businesses that operate in a particular industry. It was also made to prevent the business from attaining more power in the competitions. In simpler terms, it is a way to prevent businesses from getting into a dirty play for profits.
The relationship between Antitrust laws and Rockefeller:-
One of the most successful business persons of all time, John Rockefeller is considered as one of the most successful business persons of all time. He operated business at a time when the government had less intervention in businesses. There was no strict income tax system and John Rockefeller took great advantage of it. He ruthlessly eliminated all of his competitors and established the monopoly of his business. Even though he gave away all of his wealth in his old age.
Rockefeller entered the developing oil industry in the US when America’s first oil well was drilled in Pennsylvania. In 1865, Rockefeller borrowed money to buy his partner’s share. Gradually, he gained control of the refinery. The refinery became the largest oil refinery in Cleveland.
Over the years, he made new partners in the refinery business and expanded the business in the evolving oil industry. At that time, the kerosene extracted from petrol was used in lamps and its use became widespread. He formed a standard oil company in Ohio with his brother and some of the people. But John Rockefeller was the president and biggest shareholder of Standard oil.
The company obtained a monopoly in the oil industry. It took over rival companies and other developing companies to globally distribute and share its products. In 1882, many companies were combined into a standard oil company that controlled 90% of the nation’s pipeline and refineries. To exploit the companies of scale the company did everything. It began building its oil barrels and even appointed scientists to look for new petroleum by-products.
Rockefeller’s tremendous wealth and ruthless business operations caught my attention. He became a target of journalists, politicians, and everyone else and seemed a symbol of corporate greed. He was criticized for his business techniques and accused of slashing competitions, becoming rich through bribing, spying, secret agreements, and forcing the rivals to join his standard oil company. In 1911, the US Supreme Court charged the stand oil company for violation of antitrust law and ordered it’s dismantled (dividing it into 30 separate companies)
Is Facebook on the Rockefeller way?
If we compare both situations, then there are many similarities between Rockefeller and Facebook. Facebook has been accused of antitrust violation after taking over Instagram and WhatsApp. Both these deals increased the size and control of Facebook in the growing social media space.
It also facilitated data sharing between the larger social media platforms on earth. Facebook made the deal with Instagram for $1 billion in 2012 when the photo-sharing platform was expected to be its biggest competition in the future. It took over WhatsApp in 2014 for $22 billion.
These two takeovers strengthened the direct control of Facebook in the enormous social media space. Although they appear to be separate, Facebook has created a close data integration among the three platforms. It will be important to monitor the future steps of Facebook to know whether Facebook is on the Rockefeller way or not.
Also Read: 136 countries, including India, agree on landmark new global tax law
