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In: Economics

The social media industry is highly monopolistic with Facebook, users provide Facebook (and 3rd-party companies) with...

The social media industry is highly monopolistic with Facebook, users provide Facebook (and 3rd-party companies) with huge amounts of data in exchange for access to the platform. provides Facebook’s algorithms with a clear picture of your preferences or demand for certain goods/services. Technological underperformance is a welfare cost associated with monopolies. For companies such as Facebook, innovation would be minimal due to lack of competition. a) From Industry perspective, please give some ideas to argue that the market doesn't work badly and the government should not interfere

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Expert Solution

Facebook has monopoly in the market but they are self aware to secure same position in the market, they will have to keep on updating their features, tools, etc so that user are not bored by using same content, display. Despite of not having direct competition they still have indirect competition like Twitter so they will keep on upgrading their system may be with the help of survey or market research to know what's going in trend and what exactly user is looking forward.

With regards to government intervention I think government would not need to intervene as Facebook account is free for user, incase Facebook might have charged something from user then might government also would come into picture and also if we see privacy portion then user are pretty aware what kind of information they should share on Facebook and moreover Facebook has covered many privacy points to secure users account.


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