Question

Senator Elizabeth Warren is advocating anti-trust action against some giant technology companies including Amazon, Google, and Facebook. Select one of these companies and analyze at least one cost or benefit of her proposal.

I've gotten feedback on Amazon, I'd like feedback on Facebook to get a better understanding of the topic please.  

Answer 1

The ultimate aim of the policy from an economic point of view is the welfare of the consumers. However, individuals or for that matter profit oriented organizations such as companies want to maximize their profits. To seek profit or to maximize it is not wrong but that should not be unethical or through suppressing competition.

Facebook is started as a social networking site but it soon spread so fast that it has more than a billion users worldwide. It rode on the human psychological tendency to 'show off' their lifestyle and to snoop of other people's lives. The networking which allows connecting people with each other and share their views, events and almost anything instantly has made it hugely popular. We can not deny that it has helped the users to connect with other people and allowed the communication of media such as images and videos and lower cost.

However, the company has gone beyond mere social network and it collected information of the users and used it for advertising purpose. This is even after promising the privacy of the users. The company collected information of browsing habits through its own site and Facebook share plug-in embedded on thousands of other sites. It also bought out Instagram and WatsApp messenger both of which are hugely popular among people for photo sharing and messaging. The company is now worth of almost a half trillion dollar and it has a significant market power as well as user data at its hand. This is an alarming situation and it would surely destroy any other messaging or social networking competitor.

The proposal by Massachusetts senator Elizabeth Warren is quite rational to break up the companies like Facebook or Amazon because they have consolidated a significant market power.