Will MySpace ever lose its monopoly? (2007)
What they're not telling you: The Social Network Lock-In That Nobody Called: How MySpace Trapped 100 Million Users and Nobody in Washington Noticed Rupert Murdoch paid $580 million for MySpace in 2005, and within two years had constructed a digital cage so effective that 100 million users couldn't leave even when better alternatives existed. The architecture of the trap is worth examining because it's still being built today. When Murdoch acquired the platform from founders Tom Anderson and Chris DeWolfe, MySpace held something economists call network effects—the fax machine problem.
What the Documents Show
But DeWolfe's own statement to the press reveals the mechanism that transformed natural network effects into something more predatory: "In social networking, there is a huge advantage to have scale. You can find almost anyone on MySpace and the more time that has been invested in the site, the more locked in people are." Notice the language. Not "the more valuable the site becomes." The word is "locked." DeWolfe understood what his platform had engineered: a switching cost so high that migration became economically irrational for individual users even as collective exit might have benefited them all. By 2007, competitors existed and performed better in specific markets. Cyworld, which had captured South Korea through what researchers called a "real you" experience rather than MySpace's commodified "rites-of-passage" model, was attempting American penetration.
Follow the Money
Bebo and dozens of smaller clones offered alternatives. Yet none could dislodge MySpace because the switching cost wasn't technical—it was social. Users had uploaded videos, photos, audio files, message histories, and friendship networks that MySpace made deliberately difficult to export. The platform didn't prohibit departure; it made departure so friction-heavy that rational individuals stayed even when they preferred to leave. The key fact that mainstream coverage missed: this was a choice. MySpace's interface, data portability policies, and export mechanisms were entirely within Murdoch's control.
What Else We Know
The company could have enabled one-click migration to competitors. The barrier to exit was engineered, not inevitable. What makes this relevant now is that no regulator—not the FTC, not the Department of Justice, not any state attorney general—examined whether MySpace's market position constituted illegal monopoly maintenance through lock-in tactics. The question was never asked publicly. The mainstream frame, exemplified by Victor Keegan's analysis, accepted the lock-in as a natural consequence of scale rather than as a business strategy choice deserving scrutiny. By 2007, the question wasn't whether MySpace would lose its monopoly.
The pattern here is institutional silence in the face of structural power consolidation. I find striking how completely the regulatory apparatus ignored a textbook lock-in strategy: a dominant platform deliberately making exit costly not because exit was technologically difficult, but because the company chose to make it so.
What this reveals about institutional failure is this: antitrust enforcement in the 2000s focused on predatory pricing and market share theft, not on market architecture. Regulators didn't have language for examining switching costs, data portability, and export friction as potential violations. Murdoch built a cage and nobody in Washington even noticed the door was locked.
The beneficiary was obvious: Murdoch's News Corp gained a decade of advertising revenue and user data monetization from a captive audience. The cost was distributed across 100 million users who experienced reduced incentive to migrate toward products they might have preferred.
Watch for this pattern replicating: in your email, your phone operating system, your cloud storage. The question to demand answered is not whether platforms are big, but whether they've engineered exit costs that rational individuals cannot overcome. That's the monopoly that matters.
Primary Sources
- Source: Hacker News
- Category: Corporate Watchdog
- Cross-reference independently — don't take our word for it.
Disclosure: NewsAnarchist aggregates from public records, API feeds (Federal Register, CourtListener, MuckRock, Hacker News), and independent media. AI-assisted synthesis. Always verify primary sources linked above.