Rising Pressure
On December 9th, 2020, the FTC (after a lengthy period of investigation) officially launched a lawsuit against Facebook LLC for holding what they describe as an illegal monopoly.
This suit arrived just a few months after the Justice Department launched their own case against Google, the omnipresent search engine which needs no introduction. That case, which is ongoing, is focused on the alleged illegality of Google’s relationship with advertisers, as well as their monopoly on internet searches.
The FTC’s legal action comes during a time in which many countries are considering regulatory measures against large social media platforms. Rampant hate speech, misinformation, and abuse have all been cited as reasons for why Facebook and other platforms require government intervention. We at Misbar are well-versed with the extent to which these issues plague Facebook and other social media platforms.
Proposing legislation on Facebook does raise new issues though. Would regulations vary per country? Several dozen countries have banded together on this issue, but there is no guarantee that they will all remain on the same page given the rapidly shifting political and technological atmospheres. With the lawsuit taking place in the US, we could very well be seeing the first step in sweeping regulations for Social media.
The Prosecution
According to the FTC:
“The complaint alleges that Facebook has engaged in a systematic strategy- including its 2012 acquisition of up-and-coming rival Instagram, its 2014 acquisition of the mobile messaging app WhatsApp, and the imposition of anti competitive conditions on software developers- to eliminate threats to its monopoly. This course of conduct harms competition, leaves consumers with few choices for personal social networking, and deprives advertisers of the benefit of competition.”
Additionally, the FTC has stated that Facebook is “suppressing, neutralizing, and deterring serious competitive threats” in the market. Any interested readers can find the full public version of the lawsuit here.
Amongst the evidence provided by the FTC in the suit is an email from Mark Zuckerberg circa 2008, in which the young billionaire stated “it is better to buy than compete.” Not quite a smoking gun, but certainly not a good look for Facebook’s defense.
Despite the FTC throwing down the gauntlet, they were ultimately the ones responsible for things going too far. In 2012 the FTC board unanimously agreed to close their non-public investigation into Facebook's acquisition of Instagram. Two years later the federal organization allowed Facebook to purchase WhatsApp, but only under the condition that the user information from WhatsApp remain independent from the other databases.
This caveat was considered to be very important both by WhatsApp users as well as the app’s founder, Jan Koum. Having grown up during the politically tense days of the USSR in Ukraine, Koum was very conscious of the desire for safe and private communication. Four years after the merger, he stepped down from Facebook’s board of directors. This was allegedly due to disagreements over policies concerning advertisements and the encryption of user data.
Despite Facebook’s agreement with the FTC as well as European antitrust regulators, the condition over WhatsApp data was violated two years later. Facebook began to siphon user information from WhatsApp, likely to be used as a commodity for advertising (the chief revenue generator of the Facebook empire). This was particularly insulting to WhatsApp users, as the platform had risen to prominence due to their dedication to protecting the privacy of their users.
In Europe, Facebook was met with $122 million in legal fines for this breach of trust. Meanwhile, in the United States, Facebook came under fire from this clear failure to protect user privacy, but no action was taken by the FTC at that point. It is only now that the FTC is finally making good on their threat to Facebook, years after the data of WhatsApp users was taken advantage of.
Facebook’s Defense
Obviously, Facebook is not about to roll over and accept this lawsuit without fighting back. Representatives from facebook have argued that (as opposed to essential products such as oil, food, etc.) Facebook is not only completely optional, it’s free to use. On paper, Facebook provides a non-essential service. Consumers choose to use it of their own volition, not out of necessity, but because it offers the best value when compared to other social media platforms.
Technically speaking, this argument makes sense. The continual emergence of new social media platforms over time such as Twitter and Tik Tok has proven that there is room for competition in this new market.
However, the fact remains that Facebook still overshadows all other platforms. Social media users are more inclined to use platforms that are more, well, social. No one wants to use a deserted app, they want to use the one where all their friends and family and enemies are. That’s the entire point of social media in the first place!
The Bigger Picture
This lawsuit, alongside the one against google, will likely represent a turning point in the government's relationship with big tech, no matter what the outcome may be. Politicians such as President Trump have frequently criticized big tech and Silicon Valley, and it is not difficult to imagine why. The last few years in particular have demonstrated the increasingly influential power of the internet and social media applications.
Social media has become one of the main sources of information to a significant portion of the population (in the US) even though misinformation can spread like wildfire on platforms like Twitter and Facebook. This rate is increased even further in regard to major events, which were very prevalent elements in 2020 considering all the commotion around the virus and the US presidential election.
Despite the superficial appearance of social media, Facebook is a serious business with serious repercussions; in financial, social, and political spheres alike. The company has been pretty lucky to get away with a shocking lack of governmental regulation, but it appears as though that will not be the case going forward.
To some, this legal challenge is long overdue. It is no secret at this point that tech giants such as Facebook, Google, Apple, Microsoft, and Amazon have vast swaths of user data which they can, in all honesty, hold to ransom. They have enormous resource pools to draw from and are by no means underdogs any longer. Given the tensions between Washington D.C. and Silicon Valley, it is likely that these lawsuits are just the first battles of a long war.
