APPROACHES TO ASSESS MARKET POWER IN THE ONLINE NETWORKING MARKET

Facebook, the world’s largest online networking platform, is the subject of multiple antitrust investigations by various state and federal regulators. Yet scholars and practitioners remain divided on how to measure Facebook’s market power. Some argue that conventional approaches for identifying market power are suitable for the online networking market. This Article argues such conventional approaches are inadequate for assessing market power in online networking markets.


I. INTRODUCTION
Digital platforms play an essential role in fostering economic growth. This is because they "facilitate trusted transactions between strangers on a digital platform," 1 allowing users to communicate and transact efficiently over the internet. Facebook is one of the most successful digital platforms in today's world.
Facebook is a two-sided market, meaning that the platform serves as an intermediary to facilitate communications and transactions between two groups: consumer users and advertisers. 2 The rapid development of the internet has strengthened the intermediary role of online networking platforms because they can now "offer faster, better, smarter, cheaper, and more convenient solutions to consumers' wants, needs, and desires." 3 Today, Facebook is the wealthiest online social networking platform in the world based on number of users and overall revenue. 4 Facebook has approximately 244 million monthly active users in the United States and Canada, encapsulating approximately 90.9 percent of the U.S. market. 5 Facebook's success comes from its outstanding ability to meet users' social needs. The platform provides a costless medium for users to build social lives, fulfilling the "need to belong" and "need for self-presentation." 6 Furthermore, Facebook has served as an important information center that allows users to learn about the world in a more efficient way. 7 An empirical study has shown that around 69 percent of American adults are Facebook users, and around 74 percent of them visit Facebook every day. 8 However, Facebook's dominant market share raises serious antitrust concerns. Facebook's large market share strengthens market concentrationleading to a very limited number of players in the market. 9 High market concentration is traditionally considered an indicator of market power. 10 Furthermore, high market concentration is associated with entry barriers-another indicator of market power. 11 As a result, over the past three years, 47 state attorneys general, the Department of Justice, and Congress have all announced antitrust investigations involving Facebook. 12 4 For example, Facebook launched the COVID-19 Information Center that updated daily. Therefore, its users can access to latest information on COVID-19 development easily via Facebook. See Facebook, COVID-19 Information Center, https://www.facebook.com/coronavirus_info. 5  To initiate an antitrust proceeding under Section 2 of the Sherman Act, a plaintiff must first show that the defendant has market power. According to the Department of Justice, market power is defined as "a seller's ability to exercise some control over the price it charges." 13 Failure to meet this burden is grounds for dismissal. 14 Put simply, no antitrust action against Facebook can proceed unless regulators can show that the company has market power.
Herein lies the problem: In practice, three challenges make it difficult for regulators to demonstrate the market power of Facebook and other social media behemoths. First, regulatory agencies do not have detailed information on how the platforms use personal data, a reality that prevents governments from understanding how digital platforms operate. 15 Furthermore, because dominant digital platforms like Facebook develop rapidly, regulators find it hard to effectively respond to technological developments . 16 Most importantly, traditional antitrust theories are ill-suited for assessing the digital marketplace because the essence of competition among online networking platforms lies in quality, access to information, and innovation instead of pricing and output. 17 This Article aims to overcome these difficulties by advancing alternative approaches for demonstrating the market power of online networking platforms. Specifically, this study suggests that the information gap approach, the switching costs approach, and the entry barriers approach are more suitable in defining market power of online networking platforms. These approaches are growing in popularity among United States courts; thus, the proposed framework does not present a dramatic break with established practice. Notably, while the study uses Facebook as its main example, the findings of this paper are equally applicable to other online networking platforms.
The Article is organized as follows: Part II begins with an overview of the concept of market power, canvassing three traditional approaches for assessing market power. Part III analyzes the economic characteristics of online networking platforms to determine the suitability of traditional analytical approaches to assess 13 See U.S. DEP'T OF JUST., supra note 10, at 19. 14  Facebook's market power. Part IV reviews recent United States case law on market power in online networking platforms. This body of case law introduces three approaches for evaluating market power in this industry-the information gaps approach, the switching costs approach, and the entry barriers approach. Part IV then assesses the viability of each method of determining Facebook's market power. Part V summarizes the study's main findings and proposes a more viable legal framework for assessing market power in online networking platforms.

II. TRADITIONAL APPROACHES TO ASSESS MARKET POWER
Section 2 of the Sherman Act, 15 U.S.C. § 2, is applied in most antitrust cases involving online platforms. It provides that "[e]very person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several states, or with foreign nations, shall be deemed guilty of a felony . . . ." As highlighted above, to bring a successful section 2 case, claimants are required to prove two elements: the existence of market power and anticompetitive behavior. 18 Consequently, market power is a central element of the antitrust analysis. 19 Indeed, the main goal of antitrust law is to prevent either the formation or the misuse of market power. 20 It is important to note that there are legitimate means of obtaining market power that do not violate section 2. In fact, these legitimate means may be economically desirable. Antitrust law prohibits conduct that creates and increases market power that are "not competition on merit." 21 Courts and scholars have yet to produce an exact definition of market power. In most Sherman Act cases, courts simply say that a violation requires "a high degree of market power." 22 Violation by attempted-monopolization requires "a lesser but still significant market power." 23 The Supreme Court defines monopoly power under section 2 as "the power to control prices or exclude competition." 24 For their part, economists define market power as "the ability of a firm (or a group of firms acting jointly) to raise [the] price above the competitive level without losing so 18  many sales so rapidly that the price increase is unprofitable and must be rescinded." 25 These definitions don't give precise, predictable guidance to judges or practitioners.
As a result, despite the importance of market power to this area of law, it is incredibly challenging to legally assess a firms' market power. Therefore, scholars and practitioners have developed frameworks to apply these broad principles to specific antitrust issues. 26 This section introduces three approaches traditionally employed by courts to examine the presence or absence of market power.

A. Direct Effects Approach
The earliest approach was the direct effects approach, which was proposed to address the difficulties associated with assessing market power. Under this framework, market power may be inferred if anticompetitive harm (direct effects) is found. 27 This method was first applied by the Supreme Court in 1899 in Addyston Pipe & Steel Company v. United States 28 and was subsequently followed by lower courts. 29 The approach was expressly adopted by the United States Department of Justice in 2008. 30 Under the direct effects approach, market power may be shown in cases where "direct evidence is introduced that the defendants have in fact increased prices above the prevailing level." 31 This approach allows courts to sidestep difficult questions about defining the relevant market or measuring the alleged monopolist's market share. 25 Posner & Landes, supra note 22, at 937; see also Newman, supra note 11, at 1172 (defining market power as "the ability to raise price profitably above the competitive level."); HOVENKAMP, supra note 18, at 106 (defining market power as "the power to raise prices above competitive levels without losing so many sales that the price increase is unprofitable."). 26 For example, rule of reason is not written in Sections 1 and 2 of the Sherman Act, but courts generally recognize and apply this rule to specific cases, to avoid unduly discouraging procompetitive business activities. 27

B. Lerner Index Approach
The Lerner Index was developed in 1934 by Professor Abba Lerner. 32 Its premise is that in a competitive market, firms set prices to match their marginal costs. 33 This equilibrium price is treated as the optimal result under perfect competition. 34 Firms might prefer to charge a higher price, but if they do, and if the market is perfectly competitive, consumers will just select suppliers who offer similar products at lower prices. 35 Following this logic, the Lerner Index approach reasons that monopolists can set a price in excess of marginal costs. Thus, monopoly power can be inferred from the difference, if any, between the price the monopolist charges and its marginal costs. 36 The Lerner Index represents this difference as monopoly gainthe profits generated by monopoly position. 37 As such, the Lerner Index suggests that the degree of market power can be determined by the following formula: − wherein P refers to price and C refers to marginal costs. 38 The results range between one and zero. The higher the index, the higher market power a firm enjoys. 39 Some courts have embraced the Lerner Index approach. In In re Air Passenger Computer Reservations Systems Antitrust Litigation, the defendants' Computerized Reservation System (CRS), SABRE, connected airlines and travel agents who "send and receive air transportation booking information, book flights and print out a ticket." 40 SABRE had ultimately become the largest CRS, servicing "more than 11,000 travel agency locations" and more than 650 airlines and projects. 41 The plaintiffs brought suit against the defendants for violating section 2 of the Sherman Act, claiming that the defendants illegally denied them access to SABRE The plaintiffs relied on the Lerner Index approach to show the defendants' market power. They presented evidence that "defendants pric[ed] booking fees above marginal costs." 43 Furthermore, the defendants provided different prices to buyers who were in similar positions. 44 The plaintiffs also noted entry barriers through the low degree of substitutability between SABRE and the competing CRS. 45 The court accepted the evidence and held that these three allegations were sufficient to infer the defendants' market power. 46 More recently, in Kickflip, Inc. v. Facebook, Inc., plaintiff Kickflip alleged that Facebook had market power and willfully maintained the power in an anticompetitive manner in their "virtual-currency service" market, Facebook Credits, and "Facebook's social-gaming network" market. 47 Kickflip asserted that Facebook charged higher fees than other service providers and had at least seventyfive percent of the market share in these three markets, which plaintiff argued was sufficient to constitute market power. 48 The court concluded that Kickflip's allegations were adequate to infer Facebook's market power in the relevant markets. 49

C. Market Share Approach
Proposed by Professor Landes and Posner in 1980, the market share approach infers market power by observing market share, market elasticity of demand, and market elasticity of supply. 50 The key idea is that while high market share tends to generate market power, high market elasticity (of demand or of supply) tends to limit market power.
The first factor considered by the market share approach is the elasticity of demand. In short, high elasticity of demand limits market power. When market elasticity of demand is high, more substitutes are available to consumers, which "limits the firm's market power" because consumers are less dependent on the monopolist's product or service. 51 When elasticity of demand is high, a firm that raises its prices (or lowers the quality of its product) will lose quite a bit of market share. 52 Conversely, as the elasticity of demand decreases, a firm has an 43 Id. at 1461. 44 Id. at 1461-62. 45 Id. at 1462-63. 46  increasingly strong incentive to artificially reduce its output to raise prices, 53 gaining monopoly profits at insignificant cost to the firm. 54 Second, high elasticity of demand is also correlated with a high "elasticity of supply" of the competing firms. 55 This metric also limits market power because, when the monopolist's competitors have a higher elasticity of supply, they may introduce a larger quantity of goods into the market. As such, once the monopolist raises its price, its competitors can respond quickly by increasing their output to meet the market's demand for the monopolist's goods and services. 56 This drives prices down.
In addition to these measures of elasticity, the market share approach also looks to market share. In a concentrated market, where a single firm possesses a vast majority of the market share, the firm's competitive fringes, each of which has a small market share, are unlikely to increase production capacity in response to a firm's price increase. 57 Consequently, for a firm with a large market share, "it is cheaper to raise price[s] by curtailing output if fringe [firms] have a lower market share since the same percentage increase by the fringe will yield a smaller absolute increase in their output." 58 The market share approach of focusing on the correlation of firms' market share and market power is widely recognized by courts. 59 The first case that introduced the market share approach into the judicial forum is the 1945 Alcoa decision. 60 Several decisions followed Alcoa with slight modifications to meet the needs of specific factual situations. 61 56 See id. Professor Landes and Posner noted "if that elasticity were infinite in the relevant range, the elasticity of demand facing firm i would also be infinite and i would have no market power. . . . Theoretically, it is possible for firm i to have no market power even with a 100% market share, because the supply elasticity of potential competitors might be infinite at a price slightly above that charged by firms i." Id. at 945-46. 57  Nevertheless, courts still consider market share as a primary criterion in determining the presence or absence of market power, 65 partly because the market share approach provides courts with a workable method for identifying market power issues. This approach has been applied in the context of online platforms. In In re eBay Seller Antitrust Litigation, several consumers challenged eBay and argued that it had violated section 2 of the Sherman Act by abusing monopoly power in the online auction marketplace. 66 The Plaintiffs used the market share approach to show eBay's market power. They noted that eBay owned more than eighty percent of the market share in the online auction market, which was enough "to establish a prima facie case of market power." 67 The court accepted this analytical approach. 68

III. APPLYING TRADITIONAL APPROACHES TO THE ONLINE NETWORKING MARKET
To examine whether the traditional approaches are applicable to measure online networking platforms' market power, this section begins with an explanation of Facebook's business model. It then discusses potential weaknesses of the traditional approaches. Though this Article uses Facebook as its main example, its findings are equally applicable to other similar online networking platforms.

Structure: The Two-Sided Market
In order to appreciate the challenge involved in identifying the market power of online networking platforms, it is important to understand their structure. Facebook's business model relies on what economics describe as a "two-sided" market. Such a market is characterized by the interdependent nature of two groups of users demanding distinct yet ultimately related services from a single entity. There are two independent groups to which Facebook provides services. First, users demand social media tools while giving their personal information in return. Facebook then sells this information to advertisers, a second user group. Thus, each group's demand level depends on that of the other: As more customers join Facebook and as the platform accumulates more data on these users, more 63 Ball Mem'l Hosp., Inc. v. Mut. Hosp. Ins., 784 F.2d 1325, 1335 (7th Cir. 1986); see also advertisers will flock to Facebook to buy that information in the form of a refined value-added and targeted advertising product. 69 The following explores Facebook's two-sided market in more detail. In doing so, it highlights the complexities of antitrust investigations involving online networking platforms. i.
Two Sides of the Market: Users and Advertisers Figure 1 summarizes relationships between the key players in Facebook's twosided market. At the outset, it must be noted that online networking platforms normally provide more than one service. For example, apart from networking services, Facebook has gaming, publishing, and media services. To simplify the following analysis, this section focuses exclusively on Facebook's social networking services. Facebook's users can use the platform to express themselves by posting text, articles, photos, and videos on their Facebook feeds. Friends of users and the broader public may view this information and provide immediate feedback. In Facebook, by tapping the "Like" button or using other reaction options, users can express their thoughts toward their friend's post in an effortless way. In addition, users can create or join groups whose members have personal ties, 73 similar careers, 74 or similar interests. 75 To broaden its user base, Facebook has launched various complementary services. For example, Facebook allows game developers to design interactive games for the platform, which helps the platform facilitate personal interactions between users. 76 Beyond social networking, Facebook can now also claim a footprint in career services, and it continues to grow its media arm. 77 In fact, research shows that 62 percent of adults in the United States use social media as their main source of news. 78 The majority of these adults get their news stories from Facebook. 79 Facebook's success on the user side corresponds to its substantial success on the advertisement side of the business. Facebook efficiently identifies suitable users 70  Facebook's vast data troves, along with its advanced data analysis tools, enable advertisers to expand their businesses by accessing consumers. Thus, advertisers have gravitated to Facebook, providing the company with an enormous and consistent flow of advertising revenue. As a result, Facebook can cover the costs of its free services while continuously developing new products for its users. 84 This business model further strengthens Facebook's competitive advantage over its competitors.
In summary, Facebook provides value on both the user and advertiser sides of the market. On the user side, it presents relevant advertisements to consumers for consumption purposes and provides various services to enrich users' lives. Through its big data analysis, Facebook can analyze a considerable volume of information in a rapid manner and subsequently provide personalized information to each consumer. 85 This service reduces information gaps within the market and lowers the costs associated with locating the information. 86 Accordingly, consumers are more willing to consume goods and services. 87 (1960)). Professor Coase concluded that the inherent cost of market transactions is unavoidable in the real world because "in order to carry out a market transaction it is necessary to discover who it is that one wishes to deal with, to inform people that one wishes to deal and on what terms, to conduct negotiations leading up to a bargain, to draw up the contract, to undertake the inspection needed to make sure that the terms of the contract are being observed, and so on." 87 This concept was called Lemon Market Theory, proposed by Professor Akerlof in 1970. The theory identified several correlations in quality, uncertainty, and market selection. In a market where product quality information is not readily available, sellers tend to sell lower-quality products since they realize that selling inferior products merely harms the market as a whole rather than individual sellers. Knowing this market reality, consumers tend to cut the price they are willing to pay for the products. The resulting dishonesty drives legitimate sellers with higher cost out of the market. See enhanced to some extent through the participation in the digital marketplace. 88 On the advertiser side, Facebook serves as an intermediary between users and advertisers and it reduces transaction costs for both parties. 89 Facebook's ultimate value to advertisers lies in its ability to create dedicated channels for reaching specific user segments.

ii. Exterior Competition and Expansion
It is important to briefly consider Facebook's competitive environment, which cannot be ignored in a market power analysis.
The online networking market consists of online networking service companies. While Facebook is the largest player in the market, it is challenged by three forces. First, the company is forced to compete with traditional one-sided platforms. 90 For example, Facebook is also in competition with billboard companies, television ad space, newspapers, and other kind of networking events for advertisement services. Facebook's networking service cannot entirely replace traditional face-to-face networking events, 91 such as academic forums, graduation ceremonies, and private parties because in-person connections generate different emotional reactions. Therefore, firms that provide in-person networking services still dominate some parts of market.
Second, Facebook competes with other multi-sided platforms. The platforms with large userbases, such as Google and Apple, can develop networking services to compete with Facebook. Typically, these competitors capture new markets by injecting capital from other successful ventures. 92 For instance, Google's main business initially consisted of online searches and advertising services, with consumer-facing productivity software lagging behind. Now, Google can use its income from search to subsidize various software businesses that compete with incumbent software firms like Microsoft. 93 George A. Akerlof, The Market for "Lemons": Quality Uncertainty and the Market Mechanism, 84 Q. J. ECON. 488, 495-96 (1970). The regulatory implication of the Lemon Market Theory is that in order to avoid inverse selection incurred from the uncertainty of product quality, regulators must take some measures such as mandatory disclosure which makes information readily available to purchasers. As consumers feel more confident with products as a result of open information on price and quality, they become more willing to purchase products at a reasonable market price, which encourages more sellers to enter the market, and eventually leads to a more competitive market. 88  Third, other businesses that provide analogous services may impose a competitive threat on Facebook. 94 For example, Quora was established in 2009, providing question-and-answer interface for askers and answerers. 95 In 2018, the company earned $8 million 96 and had more than "300 million active monthly users." 97 Quora's service may progressively take Facebook's users who join online networking platforms for learning purposes.
As a dominant player in the market, Facebook endeavors to expand its business into complementary markets to capture even more users. Of course, Facebook's profits "increase as [its] networks grow." 98 Notably, Facebook acquired Instagram in 2012 in part to gain access to Instagram's photo-sharing functions. 99

Economic Effects in a Two-Sided Market
When courts employ different approaches to assessing market power, they consider a number of various economic effects. As such, this section considers the economic effects of a two-sided market. In brief, such a market is characterized by 1) interconnected demand between user groups which complicates simple inquiries, 2) substantial fixed-cost investments resulting in high market concentrations, 3) high barriers to entry, and 4) low information transparency making it hard for users 94 Id. at 16. 95  i. Interconnected Demand As noted above, Facebook is a two-sided advertising market. The first distinct economic characteristic of two-sided markets is the interdependent nature of two groups of users: one group's demand level depends on the demand level of the other. 101 In this system, advertisers demand more users to see their ads. The two sides are inextricably linked, a phenomenon which scholars call "indirect network effects." 102 In other words, due to indirect network effects, advertisers' willingness to advertise on Facebook depends on the number of people using Facebook. Facebook capitalizes on this interconnected demand. 103 Interconnected demand balances both sides' benefits and costs. In traditional two-sided markets, operators can subsidize one side by using the profits earned from the other. 104 Due to indirect network effects, any decision on one side may adversely affect the other side. 105 For instance, a change in consumer demand whereby fewer young people use Facebook reduces advertiser demand for the platformin this way each side of the two-sided platform effects the other.
This interconnected demand complicates the antitrust inquiry. In assessing the anticompetitive effects of the two-sided market, it is important to consider the two sides as a comprehensive market and not as two individual unique markets. This is because the two sides are deeply interdependent. Indeed, this is not a novel argument. In one leading case involving payment card networks, Ohio v. American Express, the Supreme Court held that courts should examine the anti-and procompetitive effects on merchants and cardholders (the two sides of Amex's payment card market) simultaneously because indirect network effect links the merchants and cardholders together. 106 A credit card is "more valuable to cardholders when more merchants accept it, and is more valuable to merchants when more cardholders use it." 107 The same theory can apply to Facebook-the platform is more valuable to advertisers when more consumers join it, and is more beneficial to consumers when more advertisers employ it.
When assessing Facebook's market power, authorities should also note the twosided nature of its cost structure. 108 Often, the user group is charged nothing, while revenues are generated from the advertiser group. Consequently, traditional antitrust analytical frameworks need to consider the features of online networking platforms. 109 ii. High Market Concentration Some industries require substantial fixed-cost investments. Transportation, energy, and financial services are all great examples. 110 In these industries, firms must acquire huge amounts of capital to get off the ground. But although these industries have high startup costs, they often have lower marginal costs associated with servicing each new customer. 111 Therefore, these can recover their start-up costs if and only if they reach a certain level of market share. 112 This promotes highly concentrated markets. After all, few firms can dedicate enough capital to develop a presence in these markets. 113 Online networking platforms fit in this category. This industry has high market concentration because it requires "high initial investment costs" but platforms incur "very low incremental costs . . . when adding [new] users." 114 Platforms attract and retain users by providing personalized services. Tailoring the platform's services requires significant start-up costs, including collecting users' personal data, developing complex data analysis capabilities, and acquiring sophisticated, custombuilt equipment to develop data analysis systems. 115  The ability of Facebook to provide highly personalized services allows it to achieve economies of scale. 118 A better understanding of its users through big data analysis gives Facebook two competitive advantages. First, on the user side, knowing user preferences allows Facebook to offer personalized services, which translates into increased reliance on Facebook by users and advertisers. 119 Repeat interactions with users allow Facebook to further refine its services. 120 On the advertisement side, reaching a large user base via personalized strategies increases revenues 121 and incentivizes advertisers to invest in Facebook. Additional investments enhance the platform's capacity to improve services. Second, due to network effects, once Facebook reaches a "critical mass of popularity, non-users see the advantages in joining the bandwagon, further enhancing the comparative attractiveness of the most popular platform operator vis-à-vis other competitors and options." 122 Ultimately, these positive feedback effects allow Facebook to become even bigger. 123 Conventional wisdom holds that high market concentration harms competition when a company conducts anticompetitive behaviors to gain or maintain market concentration. Therefore, market concentration is commonly considered by courts in determining whether antitrust law has been violated. It is unsurprising that under traditional antitrust theories, Facebook's high concentration will lead to a conclusion that the online networking market is suffering from little competition.
However, a careful assessment of the online networking market allows one to appreciate the complexities surrounding high market concentration. For many companies such as Facebook, high market concentration is inevitable due to the economic scale requirement. Economies of scale compel online networking firms to acquire a substantial market share to remain competitive. Furthermore, network effects lead companies such as Facebook to become even larger. As Facebook's large market share is an inevitable result of the online networking market, this market feature, standing alone, doesn't demonstrate Facebook's market power. 118

iii. High Entry Barriers
Entry barriers are an essential factor for assessing the degree of competition in a market. Competition is strong when there are few entry barriers because potential entrants can easily engage consumers and push down the price of goods and services. In contrast, market competition is weak where entry barriers are high. This is because without potential entrants, the dominant firms can manipulate the price without losing any business. 124 Therefore, the level of entry barriers in online networking markets may be used as a reliable indicator of market power.
Online networking platforms are data-driven, and this creates a substantial barrier to entering the market. 125 Thus, it is essential for these businesses to capture and analyze large data sets in a highly efficient manner. 126 Facebook, as one of the earliest market entrants, has a strong position in the market. 127 Latecomers are disadvantaged because they might not be able to attract users from Facebook, which can take advantage of network effects that newcomers cannot. Smaller competitors are also disadvantaged in this contest because they lack the resources necessary to run data mining operations. Without sizable datasets, these firms are less attractive to advertisers and cannot compete with Facebook. 128 Entry barriers extend to complementary markets. Because Facebook has the largest user base among existing online networking platforms, a majority of independent developers or producers closely rely on Facebook to reach new customers. The high reliance on Facebook may deter independent application developers from entering platform-adjacent markets. Due to "the constant risk that [Facebook] will foreclose access, appropriate their business value, or both, producers may be less likely to secure funding and develop their product in the first place." 129 As a result, "[a]nticipating platform discrimination or appropriation will lower expected rewards, depressing the incentive to invest." 130 This Facebookcentered ecosystem may chill innovation in the long term, 131 discouraging prospective entrants from entering the online networking market.

iv. Low Information Transparency
Consumers who rely on Facebook seem to believe that they enjoy various services for free. Without direct payments being sent to Facebook, "consumers may assume they pay nothing for opportunities to participate in beneficial [Vol. 22:231 transactions." 132 This belief is erroneous. In reality, they give out their "information about their online behavior, location, purchases, searches, website visits, and other activities" 133 in exchange for Facebook's services.
According to Rob Frieden's research, "most consumers may not fully understand both the short-and long-term consequences of intermediary transactions." 134 Although Facebook publishes its data policies online, it is still unclear whether consumers really understand these terms and conditions. Some terms are quite broad, including the terms "use," "measurement," and "analytics," each of which can hardly be defined by law experts, not to mention laypeople. 135 For example, the term "use" may include or exclude for-profit purposes.
Frieden's research identifies this inherent transparency problem. For example, vague and non-negotiable terms regarding data authorization give platforms a broad right to use consumers' data. Few of these terms restrict the use of data or give platforms responsibilities to their users. 136 Additionally, some platforms may allow "data acquisition and mining opportunities, directly or through third parties, far exceeding the ample options they have reserved." 137 Finally, platforms may not report or admit data breaches and other privacy violations in a timely manner. 138 Although users may receive information regarding data breaches from other sources, there are few opportunities to learn about such occurrences.
Economists believe that a buyer's ability to freely switch among sellers can prevent sellers from setting monopolistic prices. When a seller's price is higher than the price offered by others, buyers will switch to other sellers. Since information transparency in the online networking market is quite low, this reality disrupts the switching principle. After all, users cannot measure the quality of Facebook's services or their fair market value. Even if they could do so, they may be unwilling to switch because switching platforms means losing access to their Facebook friends.

B. Limitations of Traditional Approaches to the Online Networking Market
So far, this section has described the traditional approaches for assessing market power, explained how Facebook's business operates as a two-sided market, and identified some relevant economic characteristics of such a market. This was 132 Frieden, supra note 2, at 723. 133 Id. at 718 (citing Shelanski, supra note 9, at 1678). 134  necessary for the following, which explains why traditional approaches are limited in the face of a two-sided market such as Facebook's.

Direct Effects Approach
Unlike other approaches, the direct effects approach does not require plaintiffs to define relevant market and measure a firm's market share. Although this approach was promising, courts have rejected it "because to [accept it] would effectively collapse the two elements of the violation-power and conduct-into one." 139 Courts agree that market power and anticompetitive effects are two distinctive elements which must be demonstrated separately by the interested party. The direct effects approach goes against this consensus, making it an unpopular framework in the eyes of the judiciary.

Lerner Index Approach
The Lerner Index approach is ill-suited for assessing Facebook's market power. As a reminder, this approach identifies market power by looking at whether a firm sets prices above marginal costs. Facebook provides its services at no cost to consumers. Furthermore, marginal costs associated with serving additional users are nearly zero. 140 This makes it impossible to infer market power with reference to price and cost correlations. Moreover, this approach presumes a perfect market environment. This ideal version of the marketplace clashes with the key economic features of online networking platforms. As noted above, few players provide differentiated and quality-centric services. Additionally, information transparency is less common in the online networking marketplace, meaning that consumers have a hard time understanding the costs they incur by using the platform.

Market Share Approach
Despite the widespread adoption of the market share approach, it has several drawbacks, particularly in the context of online networking platforms. First, the application of this approach relies heavily on the definition of the market: 141 an overly broad or overly narrow market definition may lead courts to understate or overstate the firm's market power. 142  Moreover, what criteria should be used to measure Facebook's market share? While the number of users and revenue have been adopted to measure Facebook's market share, the value of these criteria is still debated in the literature. 143 Lastly, applying this approach to Facebook complicates the process because courts must determine market ratios, elasticity of demand and supply, the possibility of entry, in addition to other factors regarding other platforms' ability to control output. 144 Collecting and analyzing the necessary data on these factors from all market participants is not only technically difficult, but also incredibly costly. It is no wonder, then, that courts have tried to develop new approaches for assessing market power in the social media and tech contexts.

A. Information Gaps Approach
The Supreme Court presented the information gaps approach in the 1992 Kodak case whereby the Court clarified whether a firm with insignificant market share could have market power. 145 Instead of looking at the market share, this approach considers "the presence of 'difficult and costly' information gaps and 'very high switching costs.'" 146 After all, perfect competition assumes that "all resources are completely mobile, or alternatively, all sellers have the same access to needed inputs," and "all participants in the market have good knowledge about price, output and other information about the market." 147 Information gaps occur when consumers do not know information that is essential for choosing between firms, or when they have little access to such information. 148 This overturns the presumption that all information is readily accessible. Information gaps "prevent consumers from obtaining perfect knowledge about that market, causing the market to move further away from the 143 See HOVENKAMP, supra note 39, at 59-62. 144 See Kirkwood, supra note 31, at 1207-08. 145 Eastman Kodak Co. v. Image Technical Servs., Inc, 112 S. Ct. 2072Ct. , 2085Ct. , 2087Ct. (1992. A similar case is Commercial Data Servers, Inc. (CDC) v. IBM where the plaintiff relied on the information gap approach to show IBM's monopoly power. The Court concluded that CDC did not present convincing evidence to demonstrate that IBM's customers had difficulties in making "informed purchase decisions" due to "high information costs." Thus, CDC's claims were groundless. See 262 F. Supp. 2d 50, 54, 55, 67-71 (S.D.N.Y. 2003). 146 See Jacobs, supra note 20, at 344-45 (quoting Kodak 112 S. Ct. at 2085-87). 147 See HERBERT HOVENKAMP, ECONOMICS AND FEDERAL ANTITRUST LAW, 4-5 (5th ed. 2016). 148 See Jacobs, supra note 20, at 344-48. competitive ideal." 149 And the Kodak Court considered the existence of such gaps to be a reliable indicator of market power.
There are several ways by which information gaps may result in market power. First, firms can shield themselves from market competition by intentionally providing inadequate, incorrect, incomplete, and even misleading information about market conditions to consumers. 150 The misleading information prevents consumers from making informed decisions, and further distorts the market's competitive function-permitting incumbent firms to cement their influence in the market.
Second, when consumers find it very costly to access information about suppliers and their products, consumers may not receive sufficient information to understand the costs of using the platform or of switching platforms. As such, firms may take advantage of consumers' lack of adequate market information by raising prices, knowing that consumers will be unable to switch suppliers or reduce consumption. 151 Lastly, many platforms provide what economists call a "credence product" which is when. consumers cannot evaluate the product's quality, either before or after their purchase. 152 For example, Facebook's services are based on information, such as users' personal background, business promotion, and news. Users cannot precisely evaluate the value of this information, even after joining the platform. 153 Because users cannot tell whether Facebook's information is better than its competitors, they have no reason to switch to other platforms-even if those platforms provide better information services.
The analysis is further complicated by platforms' rapid development. In recent years, online networking platforms have begun developing multi-function applications. Each platform endeavors to develop its own core businesses and integrated synergies. This means that it is extremely difficult to compare functions of different platforms. Without such comparisons, competition among the platforms is weakened.  )); see also PATTERSON, supra note 149, at 119 (suggesting that manipulation of information is a mean to exclude competition. This can happen in any of the following ways: "the provision of false or misleading information, the selective provision of information, distortion of the manner in which information is presented, or the denial of information content to those who would use it in decision-making."). 151 See Patterson, supra note 139, at 11-15. 152 Id. at 11. Economists have distinguished three types of products based on the ability of consumers to evaluate them quantitively. These goods and services are search products, experience products, and credence products. Search products refer to products whose quality can be evaluated by searching relevant information before the purchase. If the quality can be evaluated only after the purchase, the product is known as an experience product. 153 See PATTERSON, supra note 149, at 69, 81 (concluding that "much information is an experience or credence good.").
One may argue that obtaining information regarding online networking platforms is effortless because online search engines display search results within milliseconds. This argument, however, is only partially correct, because the ease of accessing information does not necessarily mean that one is accessing useful or accurate information. To collect useful information from search engines, one must use appropriate keywords, which poses an obstacle for the majority of internet users. 154 Further, specific information may not be available even if one tries to search online. As such, online search engines only partly solve the search problem.
In summary, information gaps, unreasonably high search costs, and the nature of Facebook's products hinder the ability of users to evaluate the quality of services. As users are unable to evaluate service quality, they lose opportunities to leave Facebook to other platforms, which plays an essential role in competition among competing platforms. This inability allows platforms to provide inferior services without losing businesses. Thus, market power may be inferred from situations where users are misled about service quality through the use of incorrect or incomplete information. For example, incomplete information about data use policy might allow Facebook to gather more personal data than previously known without triggering users' attention.

B. Switching Costs Approach
The switching costs theory was also formally adopted in the 1992 Kodak case. 155 Nine years later, it was used by the D.C. Circuit in the Microsoft decision. 156 The approach used in Kodak and Microsoft has since been further refined by lower courts in subsequent decisions. 157 As described by economists, switching costs (also called lock-in effects) are generally defined as the "costs that are incurred when switching from one supplier of a particular good or service to another supplier, including money costs and the 154  value of users' time." 158 Switching costs can be express or implied. 159 Express switching costs include contractual penalties, while implicit switching costs include the inherent uncertainties regarding a newly purchased product. 160 This approach suggests that high switching costs discourage consumers from switching to substitute providers. 161 If so, the current provider can acquire a large market share from the locked-in users 162 and block out potential entrants. 163 The effect is particularly acute when economies of scale are present.
The approach suggests that a firm's market power can be inferred if courts find that the current provider is able to charge a monopolistic price without losing consumers due to high switching costs. 164 In United States v. Microsoft, the court found that Microsoft's decision to tie its web-browser (Internet Explorer) to its Windows operating system, which already had monopoly power, was unlawful monopolization. Microsoft's operating system had more than ninety-five percent of the PC market share, 165 and Windows' great volume of applications created an entry barrier for smaller operating system developers. Further, Microsoft's behavior of "set[ting] the price of Windows without considering rivals' price" was exclusionary conduct. 166 Most importantly, the court found substantial switching costs between 158 See Aaron S. Edlin & Robert G. Harris, The Role of Switching Costs in Antitrust Analysis: operating systems. Windows has a great volume of applications which can only work with Windows. 167 Users who decide to leave Windows face switching costs: they lose their personal data and must spend time installing a new set of programs and learning how to use them. Accordingly, through the tying strategy, Microsoft artificially tied Windows (tying product) with IE (tied product). The strategy increased switching costs (personal data and time for learning) for Windows users, deterring them from leaving IE for other alternative web-browsers. The tying strategy was therefore illegal. The court found that Microsoft efforts to deter users' free mobility within the operating system market had anticompetitive effects. 168 The switching costs approach is a desirable indicator for assessing Facebook's market power. First, as previously discussed, economies of scale are a common feature of online networking platforms. 169 This creates difficulties for new market entrants. When there are no new competitors, consumers' free switching among existing platforms becomes a fundamentally important mechanism to stop dominant firms from increasing prices. Therefore, the level, the scope, and the duration of switching costs are directly correlated with market power.
Second, this approach reflects an important feature of the online networking marketplaceinformation asymmetry between platforms and users. When information transparency is low, users have a harder time switching platforms. 170 Thus, this approach provides an easier way for courts to assess market power through the presence of reliable information for users.
Lastly, the switching costs approach succeeds in confronting the reality that data stored on one system usually may not be ported to another due to technical incompatibilities. 171 As a result, users face high switching costs because they are generally unwilling to give up access to their platform-specific data.
Several factors may be used to assess lock-in effects for users of digital platforms, including users' capabilities to access multiple platforms for similar purposes, levels of data portability, the amount of data about a specific person for 167 Id. at 55 (indicating that "barrier-the 'applications barrier to entry'-stems from two characteristics of the software market: (1) most consumers prefer operating systems for which a large number of applications have already been written; and (2) most developers prefer to write for operating systems that already have a substantial consumer base. This 'chicken-and-egg' situation ensures that applications will continue to be written for the already dominant Windows, which in turn ensures that consumers will continue to prefer it over other operating systems.") (citation omitted). 168 Id. at 64-67. 169 See ZINGALES ET AL., supra note 117, at 3-4. 170 See SHAPIRO & VARIAN, supra note 164, at 103 (suggesting that "… in the information age, buyers typically must bear costs when they switch from one information system to another. Understanding these costs of switching technologies, or even brands, is fundamental to success in today's economy."). 171 Id. at 122-23. personalized services, and the level of users' trust in platforms. 172 Notably, because platforms' functions and operations vary, each inquiry will be contextual. 173

C. Entry Barriers Approach
Finally, the entry barriers approach may be appropriate for assessing the market share of an online networking platform. The presence of entry barriers is a reliable indicator of market power as they prevent potential entrants from engaging with the market and thus allow the incumbents to set competitive prices without losing business. 174 The D.C. Circuit noted in Microsoft that a firms' monopoly power is more likely to be found when the "market is [] protected by significant barriers to entry." 175 In the 1992 Kodak case, the Supreme Court explicitly adopted the entry barriers approach (as well as the switching costs approach) to find that Kodak had market power in the supplementary parts and repair service markets. This approach has been followed by the lower courts. 176 As a result, entry barriers have long been recognized as a decisive and independent indicator of market power. 177 In theory, in a market without significant barriers to entry, monopoly prices attract new entrants, who increase the supply of the product or service and drive down prices. 178 Entry barriers distort this competitive process and enable incumbents to manipulate prices. Even in price-free markets where firms are competing on quality, entry barriers still matter, as they may preclude potential competitors from entering the market and permit dominant firms to protect their monopolistic positions.
When employing this approach in the context of online networking markets, there are three indicators which may show the existence of entry barriers. One looks to whether certain resources are essential to competehere, a large user base is [Vol. 22:231 such a critical resource. Second, intellectual property rights may potentially form a barrier. Finally, in online networking markets big data technologies may constitute entry barriers to new entrants.
The first indicator looks to monopolized essential facilities and resources. 179 In some industries, certain resources are essential to competition and firms without access are at a distinct disadvantage. 180 In the online networking market, the volume of users is a critical resource for online platforms; hence, network effects, which generate more users for the dominant platform, can be considered a type of entry barrier. 181 This kind of argument is best illustrated with an example. The court first held that MySpace's eighty-two percent of the market share (measured by user visits) was sufficient to constitute monopoly power. 184 The court further held that LiveUniverse had proven the existence of entry barriers based on 179 See AREEDA, ET AL., supra note 112, at 114. The second type of entry barriers emerge from economies of scale and sunken costs. See White, supra note 35, at 9. Entry barriers generally emerge in markets where firms need to reach a relatively large market share to cover fixed cost; a great amount of output lowers costs. In a market where new entrants must invest significant resources, expansion is less likely, especially considering the dominating firms' existing advantage. Third, entry barriers may also arise as a result of regulatory limitations. For example, historically, postal, gasoline, salt, and other daily necessities were managed as state-owned businesses. Therefore, no private firms could enter these markets legally. 180  network effects and "other characteristics of the market that combine with network effects." 185 At the same time, the court rejected MySpace's argument that "the dynamic nature of the market and the constant entry and exit of competitors undermine[d]" LiveUniverse's allegations because the mere fact that there were many new entrants did not necessarily mean that potential entrants were able to challenge the existing market leaders. 186 Second, intellectual property rights may contribute to market power through IPrelated barriers. A strong IP portfolio may create entry barriers if rightsholders can exercise their rights to stop rivals from launching competing products or services. 187 However, the United States District Court for the Northern District of California held that a legal exercise of intellectual property rights is not analogous to using illegal means to maintain market power. In Facebook, v. Power Ventures, Facebook brought suit against the defendant, Power Ventures (Power), claiming that Power accessed Facebook's websites without authorization. Power counterclaimed, arguing that Facebook's business model violated section 2 of the Sherman Act. 188 To establish Facebook's monopoly power, Power noted that Facebook scrapes the data from its users and third-party websites in order to fuel its growth, which gives Facebook a strong competitive disadvantage over its competitors. 189 The court dismissed Power's entry barrier claims since Power cited no authority to support the claim that "Facebook is somehow obligated to allow third-party websites unfettered access to its own website." 190 Furthermore, "if Facebook has the right to manage access to and use of its website," it can exercise the right against unauthorized access to its website. 191 Therefore, Power's two arguments failed to [Vol. 22:231 show Facebook's monopoly power. The lesson is that while uses of intellectual property rights may constitute entry barriers, litigants have to be careful about how they describe and prove their claims to justify a finding of market power.
Third, in reviewing Facebook's market power, one should not ignore the fact that big data operations are available only to a few dominant players. An emerging issue in this field is whether big data technology can create entry barriers. Some say no, arguing that since data is non-rivalrous, users' personal information can be collected by multiple firms simultaneously. As such, any potential entrant can access and collect the data. This viewpoint is unrealistic. As noted above, data harvesting activities are highly complex. Due to big data analytics, modern firms can predict consumers' behavioral patterns and provide personalized products to trigger consumption. 192 Smaller firms must compete with tech giants with the same access to users' data. However, their attempts to collect data are complicated by first-mover advantage, network effects, and enormous upfront costs. 193 As such, when evaluating Facebook's market power, one should consider the data driven market as a substantial entry barrier.
It is noteworthy that in a two-sided market, high entry barriers in interrelated product markets can make it impossible to enter another market. 194 As an intermediary, Facebook provides services at no cost to consumers and generates profits by selling advertising channels. 195 Due to this configuration, "[i]f entry barriers are high in the interrelated products market, entry into the zero-price market may be unlikely-even if barriers are low in the zero-price product market itself." 196 Data collection is another possible source of entry barriers. Data regarding interaction with consumers is essential to offering personalized services. However, Facebook has established an incomparable dataset covering personal historical data from the whole market due to the first-mover advantage. Without the data, new entrants are unlikely to win users from Facebook by offering more attractive services.

V. CONCLUSION
Facebook is a two-sided market, which enlarges its user base by providing attractive services at no cost to consumers. At the same time, it offers personalized 192  advertising services to advertisers. The model enables Facebook to be the world's largest online networking platform by number of users.
A comprehensive market power analysis should consider Facebook's unique economic features. To that end, this Article has provided an overview of Facebook's business model and explained why traditional approaches to assessing market power are insufficient. First, the direct effects approach has rarely been employed by courts to measure a company's market power. Second, Facebook provides its services at no cost to consumers and its marginal costs associated with serving additional users are nearly zero. This makes it impossible to infer market power with reference to the Lerner Index approach. Lastly, Facebook has captured most of the market due to economies of scale and network effects, the online networking market's two critical economic features. Thus, large market share alone is insufficient to conclude that Facebook's faces no competition.
Based on Facebook's economic features, this study concludes that the information gaps approach, the switching costs approach, and the entry barriers approach are more appropriate in assessing Facebook's market power. These findings similarly apply to other high-tech giants operating under the two-sided market. Companies falling in this category include Google, Amazon, YouTube, and Apple.
The information gaps approach reflects an essential feature of Facebook's operations. Its users cannot compare Facebook's service quality before joining the network. They remain uninformed while they use Facebook's products and services. The lack of knowledge discourages people from leaving Facebook and also affects the competition between online networking platforms. Consequently, courts may infer Facebook's market power based on the seriously disadvantaged position of its users in accessing information related to the costs of using the platform.
The switching costs approach is similarly a useful tool for determining Facebook's market power. The approach acknowledges that it is very difficult to enter the online networking market. In the context of such a market, the ability of users to switch between platforms plays a critical role in maintaining market competition. Therefore, courts can infer market power based on the existence of formidable switching costs.
Facebooks' switching costs come from two main sources. First, information search costs deter switching. This is compounded by the fact that Facebook lacks information transparency. Given that it is costly for users to evaluate the quality of Facebook's goods and services, one can argue that this reflects the company's market power. Second, data migration is a significant factor. The fact that porting personal data from Facebook to other platforms is impossible for most users makes it a reliable indicator of Facebook's market power.
Lastly, the entry barriers approach succeeds in demonstrating Facebook's market power because the presence of substantial entry barriers shields companies, such as Facebook, from competitors. In the online networking market, entry barriers are related to network effects, exercises of IP rights, and existing platforms' monopoly on user data. Courts should identify entry barriers in situations where competing platforms are substantially excluded from either acquiring a meaningful number of new users or from accessing and processing their data. Moreover, entry barriers can be demonstrated by highlighting Facebook's unreasonable exercises of IP rights to exclude potential competitors. Notably, since the two sides of Facebook's platform are interrelated, high entry barriers in one side create barriers on the other side.
As authorities and consumers around the world become more concerned with the market power of Facebook and online platforms, it is vital that litigants and courts employ the right measures for assessing market power. While traditional approaches will not be useful for such markets going forward, useful approaches do exist and should be utilized.