WASHINGTON: Facebook co-founder Chris Hughes recently made headlines by declaring “It’s time to break up Facebook.” Hughes claims this online media Goliath has become way too big, and that Mark Zuckerberg has too much power. Perhaps it’s time for the DOJ to dust off its antitrust statutes and proceed.
The response by others to Hughes statement is that Facebook should just be left alone. Allow the marketplace to change, even support a new platform if a new platform is needed. Unfortunately, with their near-monopolistic online marketplaces and social media advertising platforms, companies like Amazon, Google, and Twitter have put a stranglehold on this market. Federal antitrust procedures may offer the only viable solution to this increasingly intolerable and anti-competitive situation.
Facebook: Now a behemoth that cannot be controlled by the marketplace.
The reason why? Because they own the users’ “buy-in” to the platform. Meaning that if you are one of those Facebook users that jumped on the bandwagon early – say way back in February 2004 when they first launched the platform – your Facebook account holds fifteen years of content. That includes messages, comments and photos from friends and family, including those family members who have passed.
In other words, Facebook is far more than a social media sharing place. Facebook documents a literal timeline of your life as you’ve led it for the last 15 years. This is a hard legacy for users to walk away from.
So if Facebook is an integral part of the public discourse, should it not become a public utility? Should Facebook no longer maintain private ownership of the platform?
Facebook transcends death
When users leave Facebook and that all disappears. Gone forever. However, the Facebook grip is so tight that when your family member passes, you can be appointed their Facebook manager. Creating revenue and influence well beyond the grave.
Thus reminding friends and family of our loved ones day of birth, death and significant family events. Because they live on forever on Facebook.
And that is simply why Facebook will continue at least until its more than 2.38 billion users die off.
Young people turning to Instagram, now owned by Zuckerberg
Recent demographics show that only 29.7% of Facebook users are aged 25 to 34. Younger users have instead migrated over to Instagram, which Facebook purchased for $1 billion on April 9, 2012.
Facebook made that aggressive acquisition, experts say, before a competitor like Google could make a decision to purchase it. The acquisitio was, in military terms, a pre-emptive strike against Facebook’s major competitors. Better yet, the Instagram acquisiton also allowed the aging media group to acquire Instagram’s 30 million “hipster” users.
As its name implies, Instagram is all about immediate gratification. However, Instagram today has become virtually indistinguishable from Facebook in both form and function.
But unlike Facebook, which includes plenty of opinion, thoughts and inane dialogue, Instagram is more about images, even though it also includes personal thought and opinion. And, of course, advertising is beginning to appear in your feeds. Advertising that adds yet another value stream for Zuckerberg.
Should Facebook be broken up?
The short answer is yes. Arguments for antitrust action against Facebook focuses on the social media data collection, and its effects on innovation. Data Facebook sells includes targeted advertising and political preferences.
In other words, Facebook collects and sells our personal information to advertisers and political groups, among others, enabling them to more accurately target their advertising message.
How does targeted advertising work?
Have you ever shopped online for gym shoes? Not on Facebook, just in general. Whether searching Google, going to Dick’s Sporting Goods or Nike’s website, you are just looking for a new pair of shoes.
Next, you head to Facebook to send your best friend a birthday message. And suddenly, right there, like magic appear several advertisements for gym shoes. Not passive advertisements along the edge of the page. But embedded right there in your feed.
As an example, this reporter shops at White House Black Market. Not only do I receive ads for WHBM on web pages that I visit. The ads also show up in my Facebook feed. Other advertisements I see are normally for “women oriented” items.
Items like jewelry, and cologne. And because I visit travel sites in my line of work, I also get ads on how to find cheap airline tickets in my daily feed. Within the first 20 posts to my Facebook page.
Zuckerberg and Facebook are not only monitoring what we do on Facebook and Instagram. They are also able to see our search history, friends lists and more. Simply everything you put online about you, your family and your personal life – from relationship status to political affiliations – Zuckerberg and Facebook know.
And he and his company are selling that information. Your cut: Zero.
Every time these ads show up, Facebook and Zuckerberg make money.
The antitrust question comes in as to why Facebook, or Google, who both makes millions of dollars selling advertising, should have first access to those advertising dollars. There are thousands of website that sell things, are publishers like CDN, and others that rely on advertising dollars, delivered via third-party sellers, like Ad Supply.
If a website developer that is selling a product or service cannot access those ad dollars, innovation is stymied due to lack of fair funding.
In addition, if there is little chance of making enough money to support new innovation, which David is going to invest the time or money to compete with Facebook or Google Goliath?
But its not just about the business and advertising dollars
In his comments, Hughes is emphasizing the unilateral power that Mark Zuckerberg wields. Power over Facebooks more than 2.3 billion users speech and information access..
Chris Hughes says this is “the most problematic aspect of Facebook’s power.”
Via Facebook, Zuckerberg is able to “monitor, organize and even censor” the world’s conversations. Proof of this is that when CommDigiNews pays to boost a sports or travel article to our follower’s feeds, there is never a problem.
However, no articles – news or opinion – that promote a conservative point of view is ever approved. Anecdotal, yes. But absolute proof that Facebook censors conservative messages.
Breaking up platforms allows antitrust tools to work
Hughes calls for the government to use its antitrust tools to break up the platform so that competition and market-based accountability can do its work. Hughes is apparently sure that people would choose a healthier form of discourse if they only had the option on another platform.
And there are options. Facebook, Google, and even headline aggregator Drudge Report have long lorded over the Internat. People complain about Facebook, pray for an alternative to Google and bemoan as Drudge’s weird and apparently inexplicable tilt toward more Hollywood, social and liberal headlines.
There are always a few brave souls willing to launch an attempt to break through this new social media Iron Curtain. Unfortunately, it is close to impossible for them to get any traction traction. Particularly when media, in discussing this marketplace, fail to mention competitive groups.
How about MeWe.com instead of Facebook?
One David-like competitor that has managed to establish a presence is MeWe.com. In 2016, MeWe was named a finalist for “Start-Up of the Year” in the Innovative World Technology category at SXSW.
MeWe.com is not as slick as Facebook, but it does essentially the same thing. Clearly, Facebook, with its 15 years competitive advantage, dominates the current social media space. But MeWe has managed to establish a firm, if modest place for itself in the social networking arena.
The purpose of MeWe is to provide a place where conservatives can have a conversation without Mr. Zuckerberg placing them in Facebook jail for objectionable speech.
“Objectionable speech” as defined by the Zuckerberg gang, is the posting of anything positive about Conservatism, President Trump or Pro-life groups. Or, for that matter, anything critical of the legion of left-wing, anti-American politicians and public figures who continue to support the ongoing coup attempt against Donald Trump, the country’s duly elected president.
But neither Facebook nor the equally obnoxious Twitter can deplatform anyone on MeWe. The advantage for conservative social networkers is obvious, particularly in the lead up to Election 2020.
Let’s pause for a trip down Memory Lane
Younger generations might be amazed to learn that at one time, making a so-called “long-distance” call to family or friends in another state or even in another city was a genuine event. And an expensive one, too. The costs of each long distance call was astonishingly high because Ma Bell owned the entire telephonic infrastructure in this country. And in the United States, long-distance rates were historically kept artificially high to subsidize Ma Bell’s unprofitable flat-rate local residential services. As communications technologies began an era of rapid change, the anticompetitive monopoly situation with AT&T became a real impediment for innovation and change in this industry. Hence, the Federal government’s move to break up the old “Bell System” as a way of generating more R&D and competition throughout the industry.
The 1980s: When the government and the courts terminated Ma Bell’s legal monopoly
Breaking up Ma Bell, painful though it was, finally allowed real competition among a series of long-distance telephone companies, some newcomers plus the “Baby Bells” that were carved out of the original Bell Telephone monopoly. The result of this competition are obvious. Today, generations of cell phone users call around the country, sometimes around the world, often for a single monthly charge. That’s thanks to competitive online international services such as UberConference and numerous others.
Breaking up the Ma Bell monopoly
In 1974 the United States Department of Justice of an antitrust lawsuit against AT&T, i.e., the old, original Ma Bell. During that time AT&T continued as the sole provider of telephone service throughout most of the United States.
The government sold its antitrust breakup of Ma Bellto the American public as a way that innovation in the communications sector could move ahead more quickly. But in the breakup of its then legal monopoly, which finally took place in the 1980s, Ma Bell still managed to retain certain of its assets and services.
Most telephonic equipment in the United States was produced by AT&T’s subsidiary, Western Electric. This vertical integration gave AT&T almost total control over communication technology in this country. And that’s what finally led to the antitrust case filing by the US Department of Justice (DOJ). In the original antitrust case, United States v. AT&T, the government asked the court to order AT&T to divest its ownership of Western Electric. The parade of new “Baby Bells” soon followed.
The final innings of Ma Bell’s breakup
When AT&T felt it was going to lose the antitrust suit, they proposed the breakup of the biggest corporation in American history. In their proposal, they called for AT&T to retain control of Western Electric, Yellow Pages, the Bell trademark, Bell Labs, and AT&T Long Distance.
Giving up ownership of the local operating companies, AT&T would argue, would achieve the Government’s goal of creating competition in supplying telephone equipment and supplies to the operative companies.
But most importantly, being futuristic soothsayers, AT&T also sought protection from a 1956 antitrust consent decree (United States District Court for the District of New Jersey).
The judicial finding in USDC v. the District of NJ barred AT&T from the sale of computers.
As we know with clear twenty-twenty hindsight, had that judicial ruling been upheld, AT&T and the emerging cellular phone industry would have been stymied. Today the largest cell phone companies are the “new” AT&T (formerly SBC, a surviving Baby Bell): 155.7 million (Q1 2019) followed by Verizon Wireless: 153.1 million (Q1 2019), T-Mobile US: 81.3 million (Q1 2019) and Sprint Corporation: 53.5 million (Q3 2018).
Time to break up Facebook
As Zuckerberg feels the Federal heat, he is asking for Government Regulations of the platform. (Facebook’s Mark Zuckerberg calls for more government regulations in op-ed.) That may seem magnanimous on Zuckerberg’s behalf, but it is not. In reality, by giving the government regulatory control, Zuckerberg, who is smarter than the government, keeps Facebook and its various income streams under Facebook’s ownership. Which is actually Zuckerberg’s ownership, since he holds a significant voting majority of the company’s shares.
For business and media, it’s about more than breakfast, kids and vacations
Today, 42% of marketers report that Facebook is critical or important to their business. (Source: State of Inbound Marketing 2012)
As a market place, Facebook is crowded. But it is more than the simple fact that there are plenty of widget sellers or publishers on the platform. The crux of the complaints is that Facebook owner Mark Zuckerberg gives an unfair advantage to favored companies. But at the same time, it disadvantages, those companies – both sellers and media – that it dislikes.
If you are that widget seller and have the time to understand and the money to spend on the Facebook marketplace you can be competitive. But face it: Facebook is not going to give the mom and pop store the same weight as the big box store.
Because the big box stores give them more than advertising revenues. They also pay for data that Facebook collects.
Because at the end of the day, Facebook and Google are nothing more than advertising companies. They make money by selling ads. Period. Stop.
And you can’t always trust those ads on Facebook. Anecdotally, two personal purchases made from Facebook advertisers ended up in complaints against sellers who never sent the products or sent defective products.
This is one consumer who will never purchase via a Facebook advertisement again. Fool me once, shame on you. Fool me twice, shame on me. There will not be a third attempt.
If only Facebook monitored their sellers as closely as they monitor (and deplatform) conservative news sources…
— Headline image: Facebook screen image.