In a filing at the U.S. District Court in Washington D.C., on December 9th, 2020, the Federal Trade Commission, together with 46 states, plus the District of Columbia and Guam, alleged that Facebook employed anticompetitive tactics, allowing it to bully and bury its rivals. In a strongly worded brief it recommends that the massive company be broken up, specifically by divesting itself of Instagram and WhatsApp.
“For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition. By using its vast troves of data and money, Facebook has squashed or hindered what the company perceived to be potential threats.”
–New York attorney general, Letitia James, representing the state group, at a news conference
After the 18 month long investigation, charges are finally arriving, well after Facebook has already made extensive retaliatory changes to its products. The changes that were implemented, which interlinked the functionality of Facebook apps with Instagram and WhatsApp, are clearly meant to try and make it technically impossible, or at least difficult for them to function separately again.
This amounts to a way of using computer code to fabricate a “moat”, basically an excuse or impediment which they hope, apparently, would make it impossible to reverse the changes, in the event they are forced to sell off the previously separate companies.
The brazen and obvious action which appears designed to impede and block any remedies that the court could impose is reminiscent of the now infamous “move fast and break things” motto often attributed to Mark Zuckerberg, and the, just as famous, Silicon Valley truism “Ask forgiveness not permission”.
This kind of preemptive obstruction, while not necessarily illegal in any way, is nevertheless a perfect reflection of the attitude also associated with Facebook via Peter Thiel: “Competition is for Losers” phrase which stems from title of a WSJ article on Thiel’s book and which was adopted fondly by the billionaire.
It is important, from a layman’s perspective, to note that being big or being, effectively, a monopoly, is not enough, necessarily, to justify drastic government imposed remedies. The behavior, however, in other words, wether or not there was abuse of the power a monopoly affords, is crucial.
In the past several years Facebook has been found to be guilty of abuses, primarily in European cases, as have Google and Amazon. All the evidence, so pervasive as to be easily noted by even a casual observer, points to a pattern of behavior that could be seen, and possibly even proven to be, predatory and abusive of market power.
The response from Facebook has been anything but substantive, with the initial defense being a very weak statement that the government should not be allowed “do-overs”:
“Those acquisitions were cleared and if you can buy a company, and eight years, 10 years later, the government can clear them and unwind it — that’s going to be a really big chilling problem for American business, we are not going to be competitive around the world,”
Facebook COO Sheryl Sandberg, in a recent interview with Tamron Hall
The facts in no way back up this surprisingly flaccid response, since the mergers were, in fact never, “approved” just not blocked at the time, and in public statements, in writing, the FTC clearly and specifically stated:
“This action is not to be construed as a determination that a violation may not have occurred, The Commission reserves the right to take such further action as the public interest may require.”
As for the decades old “we are not going to be competitive around the world,” comment that is the oldest excuse for awarding big internet companies with special status to run amok going back to Al Gore’s “Internet Superhighway” exemptions from the early 90s.
To quote Kara Swisher in a recent New York Times opinion piece:
“Those charged with regulation have given companies like Google, Facebook and Amazon a very wide berth to grow into some of the most valuable entities in the history of the planet. Their founders are among the richest people ever.”
— Kara Swisher, in the New York Times
And, in case anyone is feeling sorry for poor Facebook, it’s also pertinent to point out that what they claim to need or be entitled to is exactly the kind of special treatment and license to break rules that others would have to abide by.
And that status and privilege is exactly what enabled Facebook (and Amazon and Google) to become so massive and so intensely inclined toward abuse of market power in the first place.
“Action as the public interest may require. “ Remember that phrase, you may be hearing it often, over the next few years, in relation to Facebook, Google and Amazon. And, in the end, it is the public verdict in the marketplace that will ultimately have the power to intercede with enough force to achieve change.
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