Question

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

Answer 1

From industry perspective innovation requirements substantial capital expenditure however if firms chose to navigate innovation and substitute it with operating expenditure it can save substantial amounts of money and time. Like in Facebook the organisation uses User data to understand preference and habits and according to it invest funds accordingly and innovate with minimal cost. Thus for better benefits to the customers the government assures minimal intervention and forms classic case of innovation with least compliance