The Suspicious Federalization of App Downloads for Teens

You’d think that big pharmaceutical companies would look askance at the FDA. Why wouldn’t they? Development of pharmaceutical advances is very expensive, and the FDA is notoriously slow to approve the sale of what’s expensive. Drug companies have no incentive to harm or kill their customers, so why the FDA? Why indeed?

At the same time, it would be naïve to presume that the FDA is loathed by “Big Pharma.” Instead, the biggest drug companies embrace the regulator. Possessing the means and capital markets access to endure long waits for drug approval, the FDA theoretically protects bigger drug companies from the unknowns and upstarts less financially able to navigate pricey rules and regulations. In which case, the FDA serves as an expensive barrier for would-be competitors.

And since it’s an expensive barrier, the benefits for bigger drugmakers don’t stop there. Precisely because it’s costly to reach the point of FDA approval, unknowns and upstarts no doubt have an incentive to sell themselves to the biggest of the big so that they can speed up the approval of their innovations.

It was difficult not to think of this when reading a recent full-page ad in the Washington Post. Up top it read like this: Instagram supports federal legislation that puts parents in charge of teen app downloads.

Ok, but why would parents require federal laws as some form of protection for their children? Why indeed? Parents don’t need force to police what their kids are downloading. Something’s wrong with the proposed legislation, and Instagram’s support of it. Or maybe not. Think about it.

At present, Instagram is at or near the top of the social media pyramid. But it wasn’t always at or near the top. Figure that Facebook acquired it for $1 billion in April of 2012, the $1 billion valuation a small fraction of Instagram’s present value. Which is the point, or should be.

The simple truth is downloads can catch fire, take on viral qualities, or name your cliché. Out of nowhere Instagram went from being a largely unknown social media “unicorn” to the top or near-top of the proverbial pyramid. And good for it. Attempts by politicians to take Instagram and its owner down via antitrust are shameful. Shame on regulators and politicians. Instagram and Facebook’s remarkable success should be cheered, not regulated or taken to court.

Back to Instagram’s support of federal legislation that will restrict downloads, it’s difficult to not at least speculate that history is motivating Instagram’s actions. The reasons why are kind of obvious. Lurking among the various download possibilities for teens is the one, two or many that will eventually render Instagram yesterday’s news. In other words, Instagram fears another Instagram somewhere out there, quietly building its brand awareness on the way to mass appeal.

In which case, legislation of the kind that it supports makes so much sense. For one, it reads as so noble and innocuous: Instagram supports a federal law that empowers parents to more effectively police what their kids see. And in supporting what appears noble and innocuous on the surface, Instagram can limit and slow the discovery of the very app or apps that might replace it. Best of all, Instagram’s broad popularity with parents positions it to be one of the apps that parents would approve relative to the myriad unknowns out there that kids invariably discover.

Of course, for all of the above reasons it’s important that this legislation not pass. Parents once again don’t need a law, period. At the same time, businesses do require competition. A lack of it weakens them.

Hidden beneath that which reads as good and “selfless” is a desire to escape competition through political maneuvering. Applied to Instagram, passage would be a victory for it in the near-term at the expense of its long-term health.

Republished from RealClear Markets


  • John Tamny

    John Tamny is a popular speaker and author in the U.S. and around the world. His speech topics include "Government Barriers to Economic Growth," "Why Washington and Wall Street are Better Off Living Apart," and more.

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