When it Comes to Facebook, the Need for Action Has
Been Obvious for a Long Time
It’s
not too late for the government to take back power from Big Tech.
By Kara Swisher
Ms.
Swisher covers technology and is a contributing opinion writer.
- Dec. 10, 2020
It’s about time, even if it’s been a
very long 22 years.
It was 1998 when Microsoft finally
landed in the cross hairs of the federal government, when the Justice
Department and 20 state attorneys general alleged in an antitrust lawsuit that
the software giant had abused its market power to crush competition. It was the
last time the government took meaningful action against the unfettered rise of
a tech behemoth.
The Big Tech companies that have
sprouted up since the Microsoft case have been treated by government as if they
were the most delicate of flowers, in need of more nurturing than the most
finicky of ferns. There have been laughable fines, while one merger after
another was allowed to sail on by.
Those charged with regulation have
given companies like Google, Facebook and Amazon a very wide berth to grow into
some of the most valuable entities in the history of the planet. Their founders
are among the richest people ever.
It all came to a halt
with the announcement in October that the Justice Department was finally taking aim at Google in an antitrust lawsuit
focused on search and advertising. And on Wednesday, in the most potent
government action since the Microsoft case, the Federal Trade Commission and 46
states, as well as the District of Columbia and Guam, filed a lawsuit in the U.S. District Court for the
District of Columbia alleging that Facebook has employed anticompetitive
tactics that allowed it to bully and bury rivals. The filing, after an 18-month
investigation, recommends breaking up the company.
“For nearly a decade, Facebook has used
its dominance and monopoly power to crush smaller rivals and snuff out
competition,” said the New York attorney general, Letitia James, who
led the state group, at a news conference. “By using its vast troves of data
and money, Facebook has squashed or hindered what the company perceived to be
potential threats.”
The F.T.C., which is charged with
protecting consumers from corporate dominance, has ducked its responsibilities
many times over the years when it comes to tech companies. It has finally decided
in the waning days of the Trump administration to go for broke.
Facebook will bring its enormous power
to bear against the agency, which has only some 1,100 employees and a paltry
budget of $330 million. In contrast, Facebook’s revenue rose sharply to $21.5
billion in its most recent quarter, giving it ample resources to add to its
already ample resources.
“It will be the lawyer employment act
of 2020,” one regulator joked to me about the prospect of Facebook sucking up
every hired legal gun in Washington to battle the F.T.C. and the states.
But it’s no joke. And
Facebook would be wise to mount the strongest possible defense since the stars
are finally aligned for serious antitrust action. In this case, the stars
include the feds, the states — and also a bipartisan group of legislators.
For those of us who have been paying
attention, the need for this legal action has been obvious for a long time. The
unchecked growth of some tech companies has been a challenge to new entrants
and ultimately a dampener of innovation. And with unfettered power, Big Tech
companies have become bullies, armed with fists full of data, acquired through
outsize market share, to keep them at the top of the heap.
Which is why it is amusing that
Facebook’s first response to the lawsuit has been to act like a victim. It’s a
feint that those of us covering Silicon Valley have had to listen to for years,
where those with most weaponry cry most plaintively about being under siege.
The poor-little-me act is tiresome
enough, but Facebook is doubling down on the whine by claiming that the F.T.C.
cannot re-evaluate deals from years past.
“The most important fact in this case,
which the commission does not mention in its 53-page complaint, is that it
cleared these acquisitions years ago,” Jennifer Newstead, Facebook’s canny
general counsel, said in a statement. “The government now wants a do-over,
sending a chilling warning to American business that no sale is ever final.”
That’s laughable and
disingenuous. The agency never actually approved the deals in question,
specifically Facebook’s purchase of the Instagram social photo service in 2012
for $1 billion and the WhatsApp messaging service acquisition in 2014 for $19
billion. Rather, the government simply did not step in to stop the
acquisitions.
Think of it more like
regrets that are now being resolved, using proof — and an unearthed spate of
mine-mine-mine emails from the Facebook founder and chief executive Mark
Zuckerberg. His missives make it clearer than it was possible back then that
Facebook sucked up possible competitors in order to eliminate challenges to its
hegemony. And so, in hindsight, it’s time to rewind to unwind.
Here’s a test for you to better
understand what that means: What was the last significant and big social
network to gain traction?
That would be Snapchat, started in
2011. It’s a creative company that Facebook tried its best to buy. And when
Facebook was rebuffed, it simply copied Snap’s products, over and over, in
order to suck dry Snap’s innovation and kill it.
This has long been a Facebook go-to
move, which is why I am looking forward to the discovery process in the new
lawsuit to see how far Facebook pushed the Trump administration to take aim at
its most recent rival, TikTok.
This “buy or bury” strategy is
reminiscent of the allegations aimed at Bill Gates of Microsoft decades ago.
These charges still have heft when lobbed at Mr. Zuckerberg today.
Which is why Facebook’s Ms. Newstead is
trying hard to paint the case as “revisionist history,” claiming that the
government could have acted to stop the acquisitions of Instagram and What’sApp
if it were so concerned.
It’s a savvy effort to claim that we
can’t turn back time — even if we did not know then what we know now. And what
we know now is that Facebook has become a menace in ways that require limiting
its size and power.
The thing is that you can turn back time.
And even though it may take years to do so, we will wait as long as it takes.
Kara Swisher is the host of “Sway,” an Opinion
podcast, and a contributing writer. @karaswisher • Facebook
