Facebook Argues Against Breaking Up Facebook

Photo: Andrew Harnik (AP)

On Thursday, Facebook co-founder Chris Hughes penned a editorial in the New York 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 at "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 editors in the New York Times on Saturday, this time written by former deputy minister of the UK and current Facebook vice president of global affairs and communications Nick Clegg

Clegg retreaded at the company's executives having trotted out so many times that it's beyond a cliche: They know they have some work to do. He also offered an absurd offense of Hughes' argument, boiling the down to "big" poses at 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 self-defense against theoretical future antitrust enforcement.

Hughes pointed out that over two-thirds of the 70 percent of US adults on social media use Facebook, while a third use Instagram and 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, or users. In photo and video sharing, we compete against services like YouTube, Snapchat, Twitter, Pinterest and TikTok, an emerging competitor. [1965] Clegg also muddied the waters by 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 the current 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 policy makers talking about dismantling one of America's biggest global players.

Clegg also argued that Facebook is virtually all of its online ad revenue from advertising, and it only controls about 20 percent of the entire online ad market in the US — which 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 — the full cost of market domination, like suppression of competition and innovation. Clegg basically sidestepped this by just reiterating that Facebook is free, just like bothering to other allegations or anticompetitive behavior: [ThesecondmisunderstandingiswhetherantitrustlawTheselawsdevelopedinthe1800sarenotmeanttopunishacompanybecausepeopledisagreewithitsmanagementTheirmainpurposeistoprotectconsumersbyhavingaccesstolow-costhigh-qualityproductsandservicesAndespeciallyinthecaseoftechnologyrapidinnovationThat'sexactlywhereFacebookputsitsattention:buildingthebestproductsfreeforconsumersandfundedbyadvertisers

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 or 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 information remain a gap) ie, this has very little to do with antitrust law itself.

In fact, it could reasonably be characterized as an attempt to justify Facebook's own largesse on the grounds that only 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.)

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