Is it Time to Break Up Facebook?

Two weeks ago The New York Times printed a guest op-ed piece from pertinent company co-founder Chris Hughes, opining that “It’s Time to Break Up Facebook.”  It was long, printing out to 27 pages, but more or less made only the point that antitrust regulators have been remiss in allowing this firm, unquestionably now along with Amazon, Google, eBay, and Microsoft one of our technology industry’s answers to football’s Monsters of the Midway, to become a monopoly.  Hughes wrote that other Facebook creator and current CEO Mark Zuckerberg, though “still the same person I watched hug his parents as they left our dorm’s common room at the beginning of our sophomore year,” has influence “far beyond that of anyone else in the private sector or in government,” as he “sets the rules for how to distinguish violent and incendiary speech from the merely offensive, and he can choose to shut down a competitor by acquiring, blocking or copying it.”  As was also attributed to Microsoft, which garnered similar antitrust attention twenty years ago, Zuckerberg “used the word “domination” to describe our ambitions, with no hint of irony or humility,” an attitude bearing lush fruit in the form of a $500 billion de facto conglomerate including, in the form of WhatsApp, Messenger, and Instagram along with the marquee brand, four different billion-user-plus American-based social media platforms, with only YouTube in that size range not owned by them.  The Federal Trade Commission, perhaps swayed by the lack of user fees, allowed Facebook’s 2012 purchases of two of these firms which set up this situation, which now seems entrenched, and which Hughes maintained needs to end.  In the meantime, privacy issues, along with data restriction and manipulation facts and allegations, with Zuckerberg’s company draw more and more commentator attention.

So is a Standard Oil-style breakup what we need?  Here are some points to consider.

First, my personal bias is that Facebook has been greatly beneficial to me.  I used to fantasize about friends and acquaintances from different times and areas of my life getting together, and since I started with the site in 2009 I have had that capability, if not as much successful interchange as I had hoped, on my desktop.  My main beef with it is not its use of my data – I don’t mind getting focused advertising, which is as far as it now seems to go – but with, as Hughes said, being subject to “algorithms that select which users’ comments or experiences end up displayed in the News Feeds of friends and family,” when the posts I want to see are simply all of them.  I do not use Facebook for getting news, except for stories from a few business sites I selected.  Therefore, I want it to succeed and continue. 

Second, Facebook, counter to what Hughes wrote, is indeed a natural monopoly.  We do not want to maintain contacts through half a dozen platforms, returning to early last century when businesspeople needed multiple telephones on their desk and “I’m on the Bell” became a brand’s slogan. 

Third, monopolistic damage in this case, since it is not directly financial, requires ideology to identify, which means fundamentally more controversy and less clarity than the usual knowledge that with only one seller prices will rise.

Fourth, antitrust forces certainly have been weak, and need to consider market domination as well as direct cost to consumers when blocking mergers.

Fifth, though nominal startup costs for a new social media system would be low, successful publicity would be difficult.  Despite plenty of online advertising, millions of businesses will end operations this year for lack of sales.

Sixth, American employment would benefit, at least temporarily, if Facebook broke into multiple companies.  None of them, though, are or would be massive employers.

Seventh, our real causes for concern are about privacy.  It’s OK to get ads for Brazilian hotels when I’ve recently checked Sao Paulo airfares, but I don’t relish my health insurance companies seeing, for example, that I liked a page on Brie.  The time to stop these interconnections is now, when they are just getting started, and government action, as clumsy and behind-the-times as it usually seems, appears the least of evils. 

Should we break up Facebook?  Clearly the feds could undo those 2012 acquisitions and stop more.  Yet there is something distasteful about punishing a company that became so large because people wanted what it had to offer.  I think the way is to allow it to be a monopoly, but regulate it, including some loose but real limitations on speech and data usage, sort of like how AT&T was treated in the decades before divestiture.  When telephony became more innovative it was time for that arrangement to end, but before that the stability of phone service, even if long distance calling unfairly subsidized local connections, helped most people greatly.  And if mineable personal data pays for a valuable tool previously unobtainable at any price, that is OK, especially when so many people have little money to spare.  Through the regulatory authority, we could negotiate improvements and changes.  So let us not forget that the number of users on these platforms is in the billions for a reason – let’s not throw out the baby with the bath.