“Facebook accepts that with success comes accountability,” Nick Clegg, Facebook’s vice president of global affairs and communication, wrote in a statement. “But you don’t enforce accountability by calling for the breakup of a successful American company.”
The statement followed a lengthy op-ed by Hughes published online on Thursday arguing that the social media giant be subjected to extensive government oversight and separated into multiple companies, notably by spinning off the photo-sharing app Instagram and the messenger service WhatsApp.
Hughes was a co-founder of Facebook with Mark Zuckerberg 15 years ago when they were undergraduates at Harvard. He left the company in 2007 to work with the Obama campaign and more recently has focused on the issue of income inequality. In the essay, he said repeatedly that Zuckerberg is a good, kind person but simply has too much power for any one individual.
From our earliest days, Mark used the word ‘domination’ to describe our ambitions, with no hint of irony or humility”
“The government must hold Mark accountable,” Hughes wrote in the 5,800-word column arguing that the social media giant has grown far too powerful. “From our earliest days, Mark used the word ‘domination’ to describe our ambitions, with no hint of irony or humility,” he wrote. “Over a decade later, Facebook has earned the prize of domination. It is worth half a trillion dollars and commands, by my estimate, more than 80 per cent of the world’s social networking revenue. It is a powerful monopoly, eclipsing all of its rivals and erasing competition from the social networking category.”
Though others have made similar arguments over the past year, the essay by a longtime confidant of Zuckerberg drew intense interest, given Hughes’ role in the start of the company and his once close-knit relationship with Zuckerberg. Naturally, the debate also played out on Facebook itself and other social media platforms. Some said Hughes’ argument rang hollow because he had made hundreds of millions of dollars from Facebook. Others said a breakup would not fix the core issues posed by a few companies with so much power over the flow of information.
The specific prescription Hughes offered was government intervention. He wrote that the Federal Trade Commission and the Justice Department “should enforce antitrust laws by undoing the Instagram and WhatsApp acquisitions and banning future acquisitions for several years.”
He called the decision to allow Facebook to buy these two major competitors “the FTC’s biggest mistake.” He also argued that simply breaking up Facebook would not be sufficient. “We need a new agency, empowered by Congress to regulate tech companies,” he wrote, saying that “its first mandate should be to protect privacy.”
One person who embraced the essay was US senator Elizabeth Warren, who has made the breakup of Facebook, Google and Amazon a cornerstone of her presidential campaign. She expressed her support on Twitter and on Medium. “Weak antitrust enforcement has led to a dramatic reduction in competition and innovation in the tech sector,” Warren wrote. “Venture capitalists are now hesitant to fund new startups to compete with these big tech companies because it’s so easy for the big companies to either snap up growing competitors or drive them out of business.”
Tim Wu, a professor of antitrust law at Columbia Law School and the author of The Curse of Bigness: Antitrust in the New Gilded Age, also applauded the proposal. “It would be part of an American tradition of breaking up some of the largest tech companies that has produced positive results,” he said.
He pointed to the case of AT&T, the telephone monopoly that was disassembled into eight smaller companies in 1984. “A lot of what we now call the internet revolution was a byproduct of the breakup,” he said. But Kent Lassman, president of the Competitive Enterprise Institute, said industry-specific regulations can backfire. Established business interests will use them to ward off competition, he said. “It is absurd for innovative companies to require constant permission from regulators like the FTC to adapt to a dynamic market.”
As a practical matter, a Facebook breakup won’t happen anytime soon, said Bill Kovacic, a professor of global competition at George Washington Law School. He said Facebook could argue that it had grown WhatsApp and Instagram into successful businesses with satisfied customers: “How do we know they would have turned out to be an independent and effective competitor?”
He said Hughes’ essay “dramatically underestimates the difficulty for the government to prevail in such a case.” – The New York Times News Service