The Antitrust Case Against Twitter
As I read the title of this post, this seems ludicrous to contemplate. In social media, Twitter is a bit player. Depending on where you look, it has about 6 to 10 percent of social media users. In the social media market, either on the consumer or advertising side, Twitter is far short of what might trigger an antitrust investigation into its conduct.
But just because you are not a monopolist in your primary market does not mean you don’t have monopoly power in a secondary one. Twitter has had a mixed relationship with app developers who have developed applications to allow people to read and use Twitter differently from its own, first-party apps. There, I would argue, Twitter has, almost by definition, a monopoly.
Market Definition and Market Power
There have been many attempts recently to define platforms that allow for apps as monopoly providers of app services or something like it. The most notable are the Apple App and Google Play stores. However, these stores have had very stable price terms (30 percent of revenue and falling for certain classes with a large free class for apps or ad-based app business models). They have had issues with non-price terms, but these terms have been announced and put forward with at least the intent of pushing towards some measure of ecosystem health. Finally, it is a fact that apps can easily appear in both stores. Thus, while consumers have distinct preferences and some switching costs between mobile platforms, if an app is available on one and not the other, that can be a source of competition between platforms.
The same cannot be said of Twitter apps. Tweetbot, Twitterific and Ecofon and many others are, for the most part, Twitter specialised. That means they only work if Twitter allows them to work. Otherwise, they are nothing. Absent some competitors such as Mastodon or Post.news being able to become important, these apps work at Twitter’s pleasure. In other words, Twitter has a monopoly over the supply of application interfaces to these third parties. That should be enough to trigger the monopolisation provisions of most antitrust laws but also newer laws for digital regulation, such as the Digital Markets Act in Europe.
Exercise of Market Power
Having a monopoly is not illegal despite so many on Twitter failing to recognise that. But if you have a monopoly and you use that to stifle competition in a related market, that is an antitrust violation.
In this case, the related market is for the supply of Twitter reading and writing apps to consumers. Twitter is a dominant player in this market with its own apps, including mobile, desktop and web.
The most straightforward exercise of market power is foreclosure. This happens when a monopolist in one market decides to prevent any competitors from entering and competing with them in the related market. Foreclosure is bad. It is straight-out exclusion used to reduce competition. While some very strict Chicago school people might say that the problem was the monopoly in one market in the first place and you can’t be more monopoly than a monopolist, modern economic thinking recognises that the presence of competition in one market, even if supplied by a monopolist typically leads to better outcomes for consumers.
In recent days, Twitter, unannounced, has apparently decided to foreclose on third-party apps. Near as I can tell, most do not work anymore. This was such a surprise that many thought this was just Twitter breaking its API by accident. But their silence and some new evidence suggest it was intentional. Jon Gruber writes:
Twitter can of course do what it wants, and Musk owns Twitter so he can do what he wants. But pulling the plug on these clients and ghosting everyone on communications about it is so absurdly disrespectful. Zero respect for the users for those apps, zero respect for the developers behind them — many of whom had been building on the Twitter platform for 10–15 years. Just a clown show.
Gruber is incorrect here. Well, not necessarily on the clown show bit, but on claiming that Twitter can do whatever it wants. No, it cannot. Foreclosing on a market if you are a monopolist is an antitrust violation and, in my opinion, illegal.
Twitter has just said “no” to all of that ecosystem. More importantly, think of the things they didn’t do. If Twitter had some problem with those apps and, say, wanted them to pay more to Twitter or to serve up Twitter ads, then they wouldn’t shut them out and perhaps ask them to change. Instead, they would ask for or announce new terms and conditions within a reasonable timeframe. You know, that is what a normal business that wasn’t a monopolist wielding power ad hoc would do.
Twitter foreclosed, and it did so with malice. It is a textbook picture of an antitrust violation.
Now you might say, what’s the harm? People can still use Twitter’s apps. That, of course, is what Twitter wants.
But the fact is, people were not using Twitter’s apps. Many heavy users didn’t like them and used other apps. I was one of them, using Tweetbot because I liked how I could switch devices and keep reading Twitter where I left off. Twitter’s own apps haven’t managed to provide that functionality.
Along the same lines, app developers have been a source of innovation for Twitter.
A decade ago, Twitter acquired Tweetie, a pioneering app that is perhaps the definition of what you can get if you allow a third-party ecosystem. The developers of Tweetie invented the pull-to-refresh technique that is now ubiquitous across mobile apps everywhere. It then acquired TweetDeck a year later. This was an app that made it easier for people managing social media presence as opposed to just having fun on Twitter. It worked for years but recently, it looks like TweetDeck is about to be killed.
If you mess with the API, you mess with that innovative process that benefits consumers. In 2012, Twitter flirted with cutting off the API to third-party apps but backed off from that. That experience left the ecosystem shaken, and, in fact, there have been few major entrants from third-party apps since. But the existing ones did continue to update their products and attract loyal followers even as they were forced to make apps paid or stay under 100,000 users. Since then, Twitter hasn’t done much to support or stifle its API. For years, for instance, it could have worked out how to supply ads through that mechanism but didn’t. Third-party apps remain ad-free — from Twitter or anyone else.
So the harm is very simple — people had products they liked and paid for. Twitter just decided to prevent them from using those products. That is a straight-out loss for them that came from competition existing in the supply of apps to read and write to Twitter.
What to do
Personally, I think governments should take immediate action to file for injunctive relief here. Let’s get those apps back online.
Then I think that the European Union should declare Twitter’s API a designated service under the Digital Market Act. That would mean that Twitter would not be allowed to change terms and conditions or functionality or anything to app developers without a structured negotiation process in the shadow of regulatory intervention. Foreclose happening is perhaps the best case for triggering those interventions.
Most of all, I have missed Tweetbot for the past few days. I don’t really know how to do Twitter with Twitter’s own apps. Will I learn? I don’t know. The whole mess of this is just leaving me sad.