Facebook will be judged on competition grounds: Whether Zuck sucks is neither here nor there

Ian Scales
By Ian Scales

Dec 10, 2020

via flickr © ccPixs.com (CC BY 2.0)

via flickr © ccPixs.com (CC BY 2.0)

  • 48 states and the Federal Trade Commission have Facebook’s dominant position in their sights
  • The action may succeed. Then again it might grind on for years

Yesterday the US Federal Trade Commission and 48 state attorneys general joined together to launch an antitrust suit against Facebook, citing its acquisitions of Instagram and WhatsApp as stemming from a desire to neutralise competitors and build a social media monopoly position for itself before they could threaten its dominance. 

The suit is pressing for a comprehensive divestiture of both acquisitions (suits? pressing? Oh, suit yourselves!). If that legal approach were to be successful, the plaintiffs will also be looking for the government to require pre-approval of any further mergers or acquisitions to stop it from re-materialising in the manner of Terminator 2 or indeed, in the manner AT&T, which was broken up following a long antitrust action and then built itself back in only slightly different form. 

Clearly, Zuckerberg will not see Facebook dissolved without a tremendous legal fight. The immediate Facebook response to news of the suit was simple: “Years after the FTC cleared our acquisitions, the government now wants a do-over with no regard for the impact that precedent would have on the broader business community or the people who choose our products every day," it said. 

Facebook maintains that the suits are essentially an attempt at “revisionist” history.  According to Jennifer Newstead, Vice President and General Counsel for Facebook, (read a full version of her well-honed arguments here)  the company has continued to grow and be successful, not because it found a way of snuffing out competitors, but because if was best at adapting to social media users’ changing preferences in the face of competition from “Apple, Google, Twitter, Snap, Amazon, TikTok and Microsoft. We innovate and improve constantly because we have to.”

She observes that the European Commission also reviewed the acquisitions and “Found no risk of harm.”

According to Facebook and Newstead, the company has spent the intervening years investing “billions of dollars and millions of hours to make Instagram and WhatsApp into the apps that users enjoy today.”

Well, quite. But Facebook wasn’t throwing money at them from the goodness of its heart: it has done very nicely out of its ownership, building three platforms which can now share user information (despite assurances that they wouldn't) and from what we can see now, have not left any market gaps large enough to allow a hostile competitor to thrive and threaten their joint dominance. 

Importantly, between them the three platforms have the ability to control advertising pricing - something which has so far received little mention, but will do.  

To sum up (in the best courtroom drama traditions) the case should hinge on whether Facebook has engineered an unlawful dominant position, all the rest is mostly distraction. Whether Zuckerberg distributes cash to help the industry or spends his weekends helping little old ladies to cross the road, shouldn’t make any difference to the core of the legal case, but we know it will, which is why Facebook’s counsel rehearses them so eloquently. 

Conversely, the controversy surrounding the social media protections over Section 230 or the scandal of the Cambridge Analytica data breach, or the spreading of  misinformation on Covid-19 and all the other reasons that many of us hold Facebook in low esteem. These shouldn’t really be in the balance either. But they probably will be. 

There is clearly much more argument and evidence to be had on this one.

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