Regulate Facebook Like AIM

One of the former most popular and influential instant messaging apps in the world, AOL Instant Messenger, or AIM, is shutting down on December 15, AOL announced on Friday. But if it weren't for a Federal Communication Commission (FCC) regulatory decision in 2001, we might all still be using it.

Sixteen years ago, the FCC, the regulatory body responsible for things like television and radio, approved a merger between American Online and Time Warner, but with several conditions. As part of the deal, AOL was required to make its web portal compatible with other chat apps.

The government stopped AOL from building a closed system where everyone had to use AIM, meaning it had to adopt interoperability—the ability to be compatible with other computer systems.

The FCC required AOL to be compatible with at least one instant messaging rival immediately after the merger went through. Within six months, the FCC required AOL to make its portal compatible with at least two other rivals, or face penalties.

"What interoperability said in 2001 was that the relationships you have on AOL messenger are your relationships. And if you want to use a different product to access those relationships, you can," Matt Stoller, a fellow at the Open Markets Institute told me on a phone call.

The FCC's decision changed how we communicate with each other on the internet. By forcing AIM to make room for competition, a range of messaging apps and services, as well as social networks emerged. Instead of being limited to AIM, people who used AOL's portal could choose other platforms.

The FCC imposed the restrictions on AOL because the merger with Time Warner created the largest media business in the country. Government regulators feared that the behemoth would become a powerful monopoly, particularly when it came to instant messaging. At the time, AOL had over 140 million customers—or 90 percent of the market— using AIM as well as its other chat service, ICQ, combined.

The FCC's decision to force AOL to remain open provides a blueprint for how the government could similarly regulate today's gigantic internet platforms, like Facebook. Stoller said you can look at Facebook—with its over 2 billion monthly users—as having egregious control over our relationships on the internet, or what he calls the "social grid." If Facebook were forced to make room for other services on its platform in the same way AOL made room for other chat apps, new services could emerge.

"Facebook has to allow people to access their relationships however they want through other businesses or tools that are not controlled by Facebook," Stoller said. "Having them control and mediate the structure of those relationships—that's not right."

Of course, people can opt out of Facebook and choose to use other, smaller social networks. But those businesses are essentially unable to thrive because of the hold Facebook has on how we communicate online. All our friends and family are already on Facebook, and because the platform is not regulated to allow competition, it's incredibly difficult for other, newer ones to emerge.

Trying to build a competitor to Facebook in 2017 is "just insane, it doesn't make any sense," said Stoller, who is writing book on the history of monopoly power in the twentieth century. "It would be like starting a competitor to your local water company."

The FCC's decision freed other companies to build new, better instant-messaging apps without AOL standing in their way. And frankly, AIM wasn't able to keep up with them. The AOL/Time Warner merger turned out to be a disaster, and AOL couldn't figure out how to make much money from AIM, which was a free service.

If Facebook were to actually compete in the market, it might die too. And in its place, something better, or at least different, could emerge.

"Think about all of the different types of social networking tools and platforms that people could make and innovate if they have access to the social grid," Stoller said.