Facebook Argues Against Breaking Up Facebook

By Tom McKay on at

On Thursday, Facebook co-founder Chris Hughes penned an editorial in the New York Times calling for the company to be broken up, its subsidiaries Instagram and WhatsApp spun off, and future acquisitions banned for several years. Hughes argued that Facebook, and by extension its all-powerful CEO Mark Zuckerberg, suppresses competition by “acquiring, blocking or copying” it, has sweeping power over speech, and is so big it can ignore virtually all forms of external accountability. He also called for the formation of an independent government agency to regulate tech companies.

In response, Facebook trotted out its own op-ed in the New York Times on Saturday, this time written by former deputy minister of the UK and current Facebook vice president for global affairs and communications Nick Clegg.

Clegg retread a line that the company’s executives have trotted out so many times that it’s beyond a cliche: They know they have some work to do. He also offered an absurd misreading of Hughes’ argument, boiling it down to “‘big’ poses a risk to society,” reiterated Facebook’s stance that it is “in the unusual position of asking for more regulation, not less,” and offered a preview of the company’s playbook for defending itself against theoretical future antitrust enforcement.

Hughes pointed out that over two-thirds of the 70 per cent of U.S. adults on social media use Facebook, while a third use Instagram and a fifth use WhatsApp, while “fewer than a third report using Pinterest, LinkedIn or Snapchat.” Clegg responded that “all of our products and services fight for customers” against those companies:

The first misunderstanding is about Facebook itself and the competitive dynamics in which we operate. We are a large company made up of many smaller pieces. All of our products and services fight for customers. Each one has at least three or four competitors with hundreds of millions, if not billions, of users. In photo and video-sharing, we compete against services like YouTube, Snapchat, Twitter, Pinterest and TikTok, an emerging competitor.

Clegg also muddied the waters by arguing that text and video messaging services from iMessage to Skype constitute competition to Facebook’s core product – which is where he pivoted to talking about China. Clegg wrote that breaking up Facebook would be tantamount to “dismantling one of America’s biggest global players,” which seems to be a clear appeal to paranoia about U.S.’s ongoing economic rivalry with China:

In messaging, we’re not even the leader in the top three markets – China, Japan and, by our estimate, the United States – where we compete with Apple’s iMessage, WeChat, Line and Microsoft’s Skype. Globally, the context in which social media must be understood, China alone has several large social media companies, including powerhouses like Tencent and Sina. It will seem perverse to people in Europe, and certainly in China, to see American policymakers talking about dismantling one of America’s biggest global players.

Clegg also argued that Facebook earns virtually all of its online ad revenue from advertising, and it only controls about 20 percent of the entire online ad market in the U.S. – which in and of itself is actually a very big number! But it’s also a statistic that belies Facebook’s effective domination of ad dollars on social media worldwide. In the UK, for example, eMarketer estimates Facebook controls over 80 percent of the social advertising market.

Later, Clegg responded to Hughes’ point that courts and antitrust authorities in the U.S. have been increasingly hesitant to intervene in cases where large companies do not price gouge – ignoring “the full cost of market domination,” like suppression of competition and innovation. Clegg basically sidestepped this by just reiterating that Facebook is free, barely even bothering to address those other allegations of anticompetitive behaviour:

The second misunderstanding is of antitrust law. These laws, developed in the 1800s, are not meant to punish a company because people disagree with its management. Their main purpose is to protect consumers by ensuring they have access to low-cost, high-quality products and services. And especially in the case of technology, rapid innovation. That is exactly where Facebook puts its attention: building the best products, free for consumers, and funded by advertisers.

In other words: tl;dr.

Clegg rounded off his response by touting Facebook’s supposed advancements in safety and security of their services. Aside from the fact that Facebook has in reality done a jaw-droppingly bad job of doing everything from safeguarding user data to responding effectively to accusations of complicity in the Myanmar genocide (and its problems with misinformation, fake news, and election meddling remain a gaping maw), this has very little to do with antitrust law itself.

In fact, it could reasonably be characterised as an attempt to justify Facebook’s own largesse on the grounds that only it has the scale to fix the problems it created. (This becomes even more headache-inducing considering that platforms often trot out their massive scale as an excuse for their failure to stop proliferation of hateful content.)

Zuckerberg also alluded to this defence in separate comments while in Paris awaiting a meeting with President Emmanuel Macron, per TechCrunch, telling France Info, “When I read what he wrote, my main reaction was that what he’s proposing that we do isn’t going to do anything to help solve those issues. So I think that if what you care about is democracy and elections, then you want a company like us to be able to invest billions of dollars per year like we are in building up really advanced tools to fight election interference.”

“Our budget for safety this year is bigger than the whole revenue of our company was when we went public earlier this decade,” Zuckerberg added. “A lot of that is because we’ve been able to build a successful business that can now support that. You know, we invest more in safety than anyone in social media.”

Hmm. Too big and important to fail, you say.

To some extent, there’s not much new here: Zuckerberg has already called for more external regulation of Facebook, though mostly the kind of regulation that would tidy up major headaches for the company and not terribly affect its bottom line or sprawling expansion across the globe. Most of Clegg’s talking points are generic remixes of ones the company has issued in the past.

But Facebook is clearly at least a little spooked at Hughes’ suggestion that it be broken up, and it’s deploying its best lobbying gobbledygook to match. [New York Times]

Featured image: Andrew Harnik (AP)