Co-founder: Regulators must break up Facebook, here’s how
Facebook co-founder Chris Hughes says Facebook is too powerful, crushes competition, and must be broken up quickly, before it fuses together Facebook, Instagram and WhatsApp. He outlines how it could be done (New York Times).
Key points:
- “When a single company dominates any market, they become susceptible to abusing their power”
- “The harm goes beyond the economy. It goes to democracy itself”
- “Facebook is a powerful monopoly, eclipsing all of its rivals and erasing competition from the social networking category”
- “The Federal Trade Commission’s biggest mistake was to allow Facebook to acquire Instagram and WhatsApp”
- “Time is of the essence: Facebook is working quickly to integrate [Instagram and WhatsApp], which would make it harder for the FTC to split them up”
- Antitrust authorities should unwind the three services and place a temporary ban on further acquisitions to enable competition
- A break-up would mean “digital advertisers would suddenly have multiple companies vying for their dollars”
- “We need a new agency, empowered by Congress to regulate tech companies. Its first mandate should be to protect privacy”
Chris Hughes argues Facebook has become un-American, eclipsing all competition - a situation marketers have contributed to and whom, he suggests, are now suffering as a result.
The thrust of his opus, rich in personal anecdotes, is that if Facebook is allowed to integrate Instagram and WhatsApp, its cross platform reach and unified sales will become all powerful and its data and ecosystem walled off forever. Nobody (outside of China) could compete. Data protection rules such as GDPR set too high a bar for any upstart challengers: They do not have the advantage of a fleet of data centres packed with personal information freely harvested in the years prior to data regulation. Even if they manage to gain traction, Facebook will buy them or copy them.
Setting aside the personal aspects of Hughes’ 6,000 word op-ed, his assertion that antitrust regulators have failed to rein-in tech companies because they are focusing on the wrong metrics is the cornerstone. Focusing on price gouging by monopolies (or monopsonists) where the service is free cannot apply. Instead, regulators must look at detriment to consumers, which Hughes argues is taking place as Facebook crushes competition and stifles innovation. He says both users and advertisers are denied choice of platform as a result.
“The alternative is bleak. If we do not take action, Facebook’s monopoly will become even more entrenched,” Hughes states. “With much of the world’s personal communications in hand, it can mine that data for patterns and trends, giving it an advantage over competitors for decades to come.”
With that, regulators have been given further encouragement to use the weapons at their disposal as pressure for them to act beyond a $5bn slap on the wrist continues to build.
But can it be proven that Facebook has actually harmed consumers by becoming the dominant player in the market, or is that just how the system works? Pursuing other theories of harm - and there are several - may be a better bet.
