Awin Thoughts: Are we on the verge of a new antitrust era?

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Things must be pretty bad when a company’s co-founder is calling for it to be dismantled.

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But that’s exactly what Chris Hughes, Mark Zuckerberg’s former Harvard dorm buddy and co-founder of the social giant, advocated in an op-ed piece for The New York Times last week.

Understandably, the piece has captured a lot of attention across the industry. Anti-monopoly and antitrust rhetoric is gaining credence in digital advertising circles and the spotlight has naturally fallen upon Google, Facebook and Amazon.

Talk of breaking these businesses up for the sake of competition is fast becoming a popular theme among US politicians, with common ground increasingly being found amongst even the traditionally contradictory views of Donald Trump and Elizabeth Warren.

The US has a strong history of taking action against corporations that concentrate too much power in a market, dating all the way back to the Sherman Act of 1890.

Upon introducing it to the Senate, Republican politician John Sherman famously stated to his American peers, “If we would not submit to an emperor, we should not submit to an autocrat of trade with power to prevent competition and to fix the price of any commodity.”

Over the years the Sherman Act has been cited and used in multiple cases against companies that were perceived to be abusing their dominant market position. From Standard Oil and American Tobacco at the start of the 20th century, to AT&T and Microsoft towards its very end.

However, with legislators taking a progressively conservative view on what counts as monopolistic practice, narrowing their focus on whether it engenders price hikes for consumers, tech titans have generally escaped their scrutiny.

Although the Supreme Court has just this week ruled that Apple can be sued for monopolising its App Store, their decision was predicated on the fact that Apple’s 30% commission on all app sales demonstrates precisely this kind of harmful price hike.

For the most part, users don’t tend to pay to use the services offered by these companies (Facebook or Google), or if they do (Amazon’s Prime scheme), they’re often heavily subsidised to fuel growth.

Instead, users pay with their personal data and this is then used to feed the highly profitable advertising businesses that each of these companies run.

That sleight of hand has allowed Facebook to acquire companies that would ordinarily have been considered direct competitors. The FTC’s decision to green light the purchases of Instagram and Whatsapp in 2012 and 2014 respectively are now considered to have been major errors, and Chris Hughes is not alone in calling for the businesses to be split apart as a remedy against Facebook’s power.

Like many, one of the biggest issues that Hughes cites in his attack is its impact upon innovation and in suppressing a healthy start-up environment. With a reported 84 cents in every dollar spent on social media advertising going to the Facebook group, there is very little room for new businesses to evolve the space outside of Zuckerberg’s dominion. As he goes on to claim in the article with regard to the US scene, “despite all the money and hype being poured into new start-ups there hasn’t been a major new social media company launched since 2011.”

Watching all this from the shores of the affiliate world is somewhat heartening. After all, the industry has long been a champion for start-ups. The barriers to entry are minimal and there has always been room for fresh, innovative business ideas that can demonstrate their value to advertisers.

Affiliate marketing allows brands to take control over their advertising partnerships, configuring their programmes in such a way as to work with a wide array of different publisher models. And, with the historic last-click model rapidly evolving into a far more malleable incentive, that choice is continuing to widen.  

This digital diversity, a thematic cornerstone for this year’s Awin Report, is a fundamental characteristic of the affiliate industry’s and one which will undoubtedly sustain its future development.

Whether or not Facebook and its ‘triopoly’ cohorts are broken apart by regulators in the coming years, the affiliate channel will remain a haven for start-ups and innovators, providing them with access to the tools, support and partnerships that can help fuel their ventures. 

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