An article in today’s edition of The Wall Street Journal recapped a recent war-of-words between a European Facebook executive, Nick Clegg, and Apple CEO Tim Cook. At issue is the differing revenue models of the companies. Apple sells devices and subscription-based services. Facebook of course does not charge for the services it provides users and instead relies on advertising revenue. Cook claims this gives Apple an advantage in providing users with greater privacy. Clegg responded, arguing that Facebook’s model allows more people, particularly impoverished communities, to access online services.
The point of highlighting this argument is not to declare a winner, but instead demonstrate just how absurd the recent calls for regulating and launching antitrust investigations into big tech firms are. Facebook, Apple, Alphabet (parent company of Google and YouTube), and Amazon are not monopolies. They are fierce competitors. They compete for users’ trust, time, and even their dollars. They also compete for advertising revenue.
If these companies weren’t competitors, such an exchange between Clegg and Cook would have never occurred. Companies don’t waste their time or resources criticizing one another unless it stands to help their bottom line. This is why you never have and never will see a public dispute between Coca-Cola and Goodyear, for example.
In addition, this dispute between Facebook and Apple shows that legislation designed to put a price on consumer data is unnecessary. Such legislation, like the bipartisan bill recently introduced by Senators Josh Hawley (R-MO) and Mark Warner (D-VA), is mistaken not only because it is impossible for central planners to accurately price much of anything, let alone something so complicated and amorphous as data, but also because consumers clearly have alternatives available where they can assign their own price on their data. This is the crux of the dispute between Apple and Facebook.
People are free to pay a premium to a company like Apple, which claims it does not sell data to third parties, or use Facebook in exchange for the data they voluntarily provide. While the two companies aren’t entirely similar in the experience they offer the user, they do provide many of the same services. A good example is Facebook’s Messenger vs. Apple iMessage. Apple also competes with the other tech giants, like Alphabet and Amazon, in areas like hardware sales, audio and video streaming, email services, etc.
As the debate over online privacy heats up, these firms will continue to trade criticisms. This is a great sign for consumers. The worst thing that could happen would be for these companies to spend more of their time and resources trying to please Washington, only then to be subjected to antitrust breakups and other regulations. Such would dramatically limit their ability to regulate each other by competing for consumers’ trust.