 Facebook is everywhere, whether we like it or not. It's how we invite our friends to parties, how we talk to relatives, what we do on our phones while we're waiting for the microwave to finish. But even though we use it all the time, it's kind of terrible. It makes you feel bad. And you feel even worse when you realize how much data you're giving off for targeted ads and political campaigns. We didn't take a broad enough view of our responsibility, and that was a big mistake. And it was my mistake. And I'm sorry. Facebook's done so much creepy stuff that it's hard to trust them now. And even if you delete your account, it's hard to get away from the company entirely. It's complicated. And if you want to know why that is, you got to look at the big picture. In theory, there's a way to deal with companies that do things we don't like. Companies have competitors, and if one of those competitors is doing something better, then either the first company changes or it gets replaced. That's the market. But Facebook doesn't seem worried about that, and you can see why. Facebook has no real competition. If you don't like Uber, you can take a Lyft, but if you don't like Facebook, you kind of have to quit social media entirely. Facebook is the one place you can count on finding nearly all the people you know. The other networks just aren't as big. About 180 million people use Snapchat each month, and that number's actually going down. Twitter's bigger, with 330 million users, but in 2018, Facebook cleared 2.3 billion users, and it made $13 billion in revenue off them, at a time when its competitors are right on the edge of profitability. The only networks that come close are Instagram and WhatsApp, both of which are owned by Facebook. That doesn't mean Twitter and the other runners-up are doomed, but it's hard to see any of them getting to be the size of Facebook. Once you have a social network that big, you don't really need another one. The term for this is a natural monopoly. That's when entering a business is so hard that a single winner ends up dominating the industry. The classic example is the cable business. It's really expensive to lay cable to a building, but it's pretty cheap to operate once the cable's in place. If you've already run cable to all the houses in a city, it's going to be hard for anyone else to compete on price. They'd have to run a whole new set of cables, there's just no way to justify that expense. And since the cost of laying cable encourages a single big provider, you can't expect competition to solve problems like high prices or bad business practices. It's hard to be sure if social networks are a natural monopoly. They've only been around for 10 years and they're still changing a lot. Unlike cable, it's not actually that expensive to start a social network, it's just hard to get everyone on board. The barrier to entry is more about users than money. But after seeing a dozen different competitors try and fail to rival Facebook's size, there's a growing consensus that market competition just isn't going to keep the company in check. The problem is Facebook. That's the problem, and that Facebook has broken so much trust to allow you to simply gobble up every form of competition is probably not in the public interest. The simplest form of regulation would be to break Facebook up or treat it as a utility. We've dealt with natural monopolies before. When Bell Telephone started rolling out the first consumer phone service in the 1880s, people were faced with the same problem. Once there's a network of phone lines in place, there's no real reason to start a second one. Bell drove a particularly hard bargain around the expensive long-distance phone lines. If you didn't buy their local service, you couldn't use the long-distance service either. It was the kiss of death to competitors, and so aggressive that the government decided to step in. The Department of Justice actually sued the Bell system as a monopoly and won a string of settlements and consent decrees. The first one was in 1913, and the regulations just got tighter from there. In 1934, 1956, 1974, and 1982, until the company was finally broken up into a bunch of regional companies in the 1980s. Then those companies were consolidated into the heavily regulated telecoms we know today. Not everything that regulators did worked, but for the last hundred years, for better or worse, the federal government has been the main force keeping phone companies honest. It's hard to say what that kind of antitrust case would look like for social networks. For the last 40 years, the standard test for monopolies is that they raise prices, but Facebook is free like everything else on the internet. The damage isn't in higher prices, but market power, whether that's driving up the cost of reaching your followers or shaping the entire marketplace to suit its needs. The sheer size of Facebook means it can muscle into other areas like messaging or photo sharing, or buy out competitors like WhatsApp and Instagram. As long as it's impossible to compete, Facebook can keep expanding and expanding until it takes up the entire internet. And unless we find some way to keep the social network in check, that's exactly what it's going to do. If I buy a Ford and it doesn't work well and I don't like it, I can buy a Chevy. If I'm upset with Facebook, what's the equivalent product that I can go sign up for? Well the second category that I was going to talk about are- I'm not talking about categories, I'm talking about is there real competition you face? You don't think you have a monopoly? That certainly doesn't feel like that to me.
 Facebook is everywhere, whether we like it or not.
 It's how we invite our friends to parties, how we talk to relatives, what we do on our
 phones while we're waiting for the microwave to finish.
 But even though we use it all the time, it's kind of terrible.
 It makes you feel bad.
 And you feel even worse when you realize how much data you're giving off for targeted
 ads and political campaigns.
 We didn't take a broad enough view of our responsibility, and that was a big mistake.
 And it was my mistake.
 And I'm sorry.
 Facebook's done so much creepy stuff that it's hard to trust them now.
 And even if you delete your account, it's hard to get away from the company entirely.
 It's complicated.
 And if you want to know why that is, you got to look at the big picture.
 In theory, there's a way to deal with companies that do things we don't like.
 Companies have competitors, and if one of those competitors is doing something better,
 then either the first company changes or it gets replaced.
 That's the market.
 But Facebook doesn't seem worried about that, and you can see why.
 Facebook has no real competition.
 If you don't like Uber, you can take a Lyft, but if you don't like Facebook, you kind
 of have to quit social media entirely.
 Facebook is the one place you can count on finding nearly all the people you know.
 The other networks just aren't as big.
 About 180 million people use Snapchat each month, and that number's actually going
 down.
 Twitter's bigger, with 330 million users, but in 2018, Facebook cleared 2.3 billion
 users, and it made $13 billion in revenue off them, at a time when its competitors are
 right on the edge of profitability.
 The only networks that come close are Instagram and WhatsApp, both of which are owned by Facebook.
 That doesn't mean Twitter and the other runners-up are doomed, but it's hard to see any of them
 getting to be the size of Facebook.
 Once you have a social network that big, you don't really need another one.
 The term for this is a natural monopoly.
 That's when entering a business is so hard that a single winner ends up dominating the
 industry.
 The classic example is the cable business.
 It's really expensive to lay cable to a building, but it's pretty cheap to operate
 once the cable's in place.
 If you've already run cable to all the houses in a city, it's going to be hard for anyone
 else to compete on price.
 They'd have to run a whole new set of cables, there's just no way to justify that expense.
 And since the cost of laying cable encourages a single big provider, you can't expect
 competition to solve problems like high prices or bad business practices.
 It's hard to be sure if social networks are a natural monopoly.
 They've only been around for 10 years and they're still changing a lot.
 Unlike cable, it's not actually that expensive to start a social network, it's just hard
 to get everyone on board.
 The barrier to entry is more about users than money.
 But after seeing a dozen different competitors try and fail to rival Facebook's size, there's
 a growing consensus that market competition just isn't going to keep the company in check.
 The problem is Facebook.
 That's the problem, and that Facebook has broken so much trust to allow you to simply
 gobble up every form of competition is probably not in the public interest.
 The simplest form of regulation would be to break Facebook up or treat it as a utility.
 We've dealt with natural monopolies before.
 When Bell Telephone started rolling out the first consumer phone service in the 1880s,
 people were faced with the same problem.
 Once there's a network of phone lines in place, there's no real reason to start a second one.
 Bell drove a particularly hard bargain around the expensive long-distance phone lines.
 If you didn't buy their local service, you couldn't use the long-distance service either.
 It was the kiss of death to competitors, and so aggressive that the government decided
 to step in.
 The Department of Justice actually sued the Bell system as a monopoly and won a string
 of settlements and consent decrees.
 The first one was in 1913, and the regulations just got tighter from there.
 In 1934, 1956, 1974, and 1982, until the company was finally broken up into a bunch of regional
 companies in the 1980s.
 Then those companies were consolidated into the heavily regulated telecoms we know today.
 Not everything that regulators did worked, but for the last hundred years, for better
 or worse, the federal government has been the main force keeping phone companies honest.
 It's hard to say what that kind of antitrust case would look like for social networks.
 For the last 40 years, the standard test for monopolies is that they raise prices, but
 Facebook is free like everything else on the internet.
 The damage isn't in higher prices, but market power, whether that's driving up the cost
 of reaching your followers or shaping the entire marketplace to suit its needs.
 The sheer size of Facebook means it can muscle into other areas like messaging or photo sharing,
 or buy out competitors like WhatsApp and Instagram.
 As long as it's impossible to compete, Facebook can keep expanding and expanding until it
 takes up the entire internet.
 And unless we find some way to keep the social network in check, that's exactly what it's
 going to do.
 If I buy a Ford and it doesn't work well and I don't like it, I can buy a Chevy.
 If I'm upset with Facebook, what's the equivalent product that I can go sign up for?
 Well the second category that I was going to talk about are-
 I'm not talking about categories, I'm talking about is there real competition you face?
 You don't think you have a monopoly?
 That certainly doesn't feel like that to me.