Invigorating Competition in Social Networking: An Interoperability Remedy that Addresses Data Network Effects and Privacy Concerns
12 Pages Posted: 9 Jan 2021 Last revised: 5 May 2021
Date Written: April 30, 2021
Abstract
The persistent dominance of Facebook has led many scholars and policymakers to generate
proposals to invigorate competition in social networking. In this piece we address a remedy that
has received renewed attention: interoperability. Prior proposals of interoperability have focused
on eroding entry barriers that exist due to user-based network effects. We focus here on
data-generated network effects: the more data Facebook acquires from its users, the more its AI
algorithms can learn and improve the content Facebook provides its users. Without access to a
rich stream of user data, a social network is merely a static interface, with limited capacity to
serve engaging or personalized content. As such, we propose a version of interoperability that
addresses both user and data-driven network effects. In doing so, we also explicitly tackle the
privacy issues that invariably arise whenever data is shared across firms.
Keywords: Antitrust, Interoperability, Privacy, Digital Platforms, Social Networking, Competition, Tech, Economics
JEL Classification: K2
Suggested Citation: Suggested Citation