Meta was recently ordered to pay $25 billion for deceiving users about data privacy. Before reading Stigler '71, I would have viewed this ruling as the legal system protecting the public interest by punishing a misbehaving company. Now, I view it more cynically: Stigler states regulation is "acquired by the industry and is designed and operated primarily for its benefit," and Meta used this regulation to pay a short-term cost to beneficially hinder long-term competition by blocking new entrants.
Meta earned $52.48 billion in profit through September this year and had a valuation of $1.8 trillion. This regulation is ex post, as Meta already has a large user base and vast amounts of data that provide network effects, economies of scale, and market dominance. Meta can eat fines that would bankrupt new entrants trying to gain market share using the same tactics. No company wants to pay $25 billion in regulatory fines, but for Meta, that cost would certainly be worth protecting its $1.8 trillion market valuation.
Even if Meta publicly whines about regulation and litigates against it, one indication of whether it is willing to bear these costs to shut out new entrants is whether it has historically advocated for regulation on its industry. Mark Zuckerberg has done just that, but surely he desires government regulation for the sake of the public interest, not Meta's private interests, right?
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