Today’s competitive digital marketplace will drive policy changes

This first appeared in an IDG Contributor Network Column for CIO.com.

After the Facebook hearings policymakers should remember that there’s plenty of room for new players in the digital marketplace.

In an almost perfect illustration of the new competition policy thinking that is gaining ground among advocates and antitrust practitioners, Tim Wu recently advised his New York Times readers “Don’t Fix Facebook. Replace it.” What we need, he said, are new “social media platforms that are fundamentally different in their incentives and dedication to protecting user data.”

Today’s digital marketplace is open enough to allow the emergence of social media services that reflect consumer demand for privacy. Facebook might be a behemoth now with 2.2 billion users worldwide, and two-thirds of U.S. adults as users. But that can change with the arrival of alternatives providing features that consumers want. As Wu noted, “…as Lyft is proving by stealing market share from Uber, and as Snapchat proved by taking younger audiences from Facebook, “network effects” are not destiny.”

As Congressional policymakers contemplate what to do next after their two days of hearings featuring Facebook’s CEO Mark Zuckerberg, they might consider whether existing competitive forces will drive the changes they are seeking. As Makan Delrahim, head of the U.S. Justice Department’s Antitrust Division, noted in a recent address, “companies are designing technologies that respond to our revealed preferences for privacy.”

We hear lots of reasons why this hope is a vain one. Here’s one: global tech companies like Facebook have so much data no one can possibly compete with them.

Data is a vital asset, but it is plentiful.

People who use Facebook also use other social media, including YouTube, Pinterest, Snapchat, LinkedIn, and Twitter, all of whom collect the user data they need to be economically viable. Pew reports that the typical American uses three of these major social media platforms. People don’t keep economically valuable data a secret from these other platforms and there is nothing Facebook or any other company can do to stop them from engaging with others elsewhere.

Moreover, as MIT business professors Brynjolfsson and McAfee note, small data sets are often good enough to provide the insights needed to power a business. In particular, they note that “you may not need all that much data to start making productive use of machine learning” and “sufficient data is often surprisingly easy to obtain.” The online educational service Udacity, for instance, was able to mine their chat room logs to improve sales and customer service.

This is an excerpt from a longer column which can be found on CIO.com.