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Prepare for the Global Corporate State of Facebook?

October 31, 2014 in Economics

By Ryan McMaken


In the dystopian movie Rollerball, all the world is ruled by one giant corporate state “controlling access to all transport, luxury, housing, communication, and food on a global basis.”

Thanks to popular media and the errors of neoclassical economics, we are trained to accept this scenario, or one similar to it, often when we are told of the latest move by a mega-corporation to extend its market share.

Two recent articles about Facebook have highlighted the social media platform’s influence in determining what news articles you see and when and how you read them. Many publishers have figured out that Facebook drives a large amount of traffic to their sites, prompting many PR pundits to declare that “the home page is dead.” In a Wired article titled “How Facebook Could End Up Controlling Everything You Watch and Read Online,” Marcus Wohlson explores just that. Wohlson’s article was prompted by David Carr’s Sunday article at The New York Times in which Carr writes: “Given the amount of leverage Facebook has, many publishers are worried that what has been a listening tour could become a telling tour, in which Facebook dictates terms because it drives so much traffic. (Amazon’s dominance in the book business comes to mind.)”

Is Facebook a Proto-Amazon?

Note the reference back to Amazon. Wohlson invokes Amazon too in his own article, and this becomes especially relevant when Wohlson suggests even that Facebook will eventually “cut out the extra click” and become the publisher of content as well as the delivery platform.

The Ghost of Amazon thus looms over the equation, since Facebook is now being framed a proto-amazon which moves from “selling” the content of other publishers and becomes a publisher itself, thus controlling the content. The subtext behind this is an assumption that Amazon is itself an evil monopolist who is destroying the wonderful legacy publishers of old.

Frank Foer at The New Republic has declared that  ”Amazon Must Be Stopped” and Paul Krugman followed up with his own article claiming that Amazon  ”has too much power, and it uses that power in ways that hurt America.” The consensus seems to be that amazon is either a monopolist or at least has unjust monopsony power and must be taken down a notch. Interestingly, however, Matthew Yglesias (of all people) has stepped in to point out what every Austrian already knew: Amazon only has the market power it …read more


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