Addressing Lock-In, Network Effects and Entry Barriers in Online Social Networks: Regulatory and Competition Law Issues

Abstract

Due to the relatively concentrated nature of the market and the predominance of Facebook, online social networking may be the next digital service facing scrutiny of the European Commission. This article analyzes two potential competition problems in online social networks from a legal perspective. Attention is paid to the extent to which switching costs and network effects give rise to data portability and social network interoperability issues. It is discussed whether competition enforcement or newly devised regulation may serve to resolve these potential competition issues. A comparison is made with the telecommunication sector where similar concerns were addressed by way of regulation imposing obligations of number portability and network interoperability on all market players. Because of this similarity, it is worth considering if any lessons can be drawn from the regulatory approach applied in telecommunications for online social networking. The fact that the portability and interoperability issues in social networks relate to personal data and not ‘merely’ to technology like in the telecommunication sector, leads to additional considerations in the data protection regime. Therefore, data protection concerns also have to be taken into account when devising remedies for the online social network industry.