Here is a great op. ed. piece by Sally Hubbard who is a former assistant attorney general in the New York State Attorney General’s Antitrust Bureau and an editor at The Capitol Forum, where she covers technology and monopolization. She makes two points 1) Facebook is a monopolist and 2) the FTC is toothless. Both need to change.
In response to calls that Facebook be forced to divest itself of WhatsApp and Instagram, Mark Zuckerberg has instead made a strategic power grab: He intends to put Instagram, WhatsApp and Facebook Messenger onto a unified technical infrastructure. The integrated apps are to be encrypted to protect users from hackers. But who’s going to protect users from Facebook?
Ideally, that would be the Federal Trade Commission, the agency charged with enforcing the antitrust laws and protecting consumers from unfair business practices. But the F.T.C. has looked the other way for far too long, failing to enforce its own 2011 consent decree under which Facebook was ordered to stop deceiving users about its privacy claims. The F.T.C. has also allowed Facebook to gobble up any company that could possibly compete against it, including Instagram and WhatsApp.
Not that blocking these acquisitions would have been easy for the agency under the current state of antitrust law. Courts require antitrust enforcers to prove that a merger will raise prices or reduce production of a particular product or service. But proving that prices will increase is nearly impossible in a digital world where consumers pay not with money but with their personal data and by viewing ads.
The integration Mr. Zuckerberg plans would immunize Facebook’s monopoly power from attack. It would make breaking Instagram and WhatsApp off as independent and viable competitors much harder, and thus demands speedy action by the government before it’s too late to take the pieces apart. Mr. Zuckerberg might be betting that he can integrate these three applications faster than any antitrust case could proceed — and he would be right, because antitrust cases take years.
Luckily, the F.T.C. has a way to act quickly. Prompted by the Cambridge Analytica scandal, the agency has been investigating Facebook for violating that 2011 consent decree, which required it, among other things, to not misrepresent its handling of user information and to create a comprehensive privacy program. The F.T.C. can demand Facebook stop the integration as one of the conditions for settling any charges related to the consent decree, rather than just imposing an inconsequential fine.
If not stopped, the integration will cement Facebook’s monopoly power by enriching its data trove, allowing it to spy on users in new ways. Facebook might decide to sync data from one app to another so it can better track users. And Facebook needs user data: The reason it commands such a large share of digital advertising is that it tracks users — and even people without Facebook accounts — across millions of sites. It gathers data that allows it to target ads more precisely than many of its rivals for digital ad dollars, including news media sites and content creators.
After stopping Mr. Zuckerberg’s integration plan, the F.T.C. should reverse the WhatsApp and Instagram acquisitions as illegal under the Clayton Act, which prohibits mergers and acquisitions where the effect “may be substantially to lessen competition, or to tend to create a monopoly.” Undoing the mergers would give consumers an alternative to Facebook-owned apps and force Facebook to do better.
Without meaningful competition, Facebook has little incentive to protect users by making changes that could reduce profits. Users unhappy about data collection and algorithms that promote fake news and political polarization don’t have anywhere to go.
Any future Facebook acquisitions, no matter what the size, should be strictly reviewed because of the company’s history of deceiving users. Facebook uses technology, like its Onavo and Research apps, that monitor consumers’ app usage to identify potential rivals even before they are big enough to get on antitrust enforcers’ radars. Internal Facebook documents published by the British Parliament show Facebook used Onavo data to identify WhatsApp as a competitive threat, only to convince regulators otherwise.
Congress also should write legislation to overrule misguided cases that have neutered antitrust enforcement, and pass a strong privacy law with enough resources to enforce it. Only then, perhaps, will we be protected from Facebook.