ST_FacebookisEverywhere

By ALEX PETROS and GENE KIMMELMAN What’s so dangerous about Facebook? The virulent spread of misleading, false information — from COVID-19 conspiracy theories to foreign election meddling — and hateful fearmongering cause divisive racial and political strife in our democracy. While we should address these very real, very scary problems, we should also delve into why these problems impact so much of our society: Facebook’s complete and utter dominance of the social media market. It’s no accident that just about everyone you know is on Facebook (or a Facebook-owned platform, like Instagram or WhatsApp). Facebook conducted a calculated campaign to buy (or lock out) potential rivals, assuring its rise to the top of social networks. If we want to stop Facebook from tearing at the fabric of our society, we need to both understand this rise and create ways for competitors to fight back. We do this by introducing more competition to the market. Facebook’s coordinated crusade to buy or lock out rivals has created a market devoid of meaningful competition while securing record profits for Facebook. Leveraging its stranglehold on user data, the company has also eclipsed competitors in the online display advertising market. Publishers — information providers that offer much of the free content you see on the web, subsidized by ads — and advertisers have borne the cost of Facebook’s march against competition while the platform lines its pockets with their ad revenue. Publishers may be squeezed out of fair payment for their own advertising space; and then advertisers ripped off by Facebook may pass those losses on to consumers, who are forced to pay more for goods – and all while Facebook intrusively mines their data without consequence. We can group Facebook’s poor behavior toward competitors into three categories. First, Facebook aggressively purchased potential rivals at inflated prices — a practice often employed by companies under threat of competition. Facebook targeted popular rivals that might one day expand into social networking, and thus, challenge Facebook’s core business. Facebook bought Instagram in 2012 and WhatsApp in 2014, ensuring that neither company could compete with the social media giant. New evidence from an ongoing Congressional investigation reveals exactly how Facebook used hardball tactics to coerce would-be rivals into selling, from warnings about CEO Mark Zuckerberg going into “destroy mode” to explicit plans to “buy any competitive startups” or copy them. Facebook didn’t stop there. It then used misleading privacy policies to raise operational costs for its rivals. Facebook’s false privacy assurances accelerated its growth, but now that it faces no competition it exploits and monetizes user data at an unprecedented scale. Privacy remains a main vector of competition in the social networking market, where consumers don’t pay to join platforms. For instance, users might well prefer a social network that best protects their data. Unfortunately, Facebook crafted such a convoluted privacy policy that it became virtually impossible for rivals to compete on privacy, effectively cutting them off at the knees. Enforcers are catching on to Facebook’s shoddy privacy record. The Federal Trade Commission imposed a $5 billion civil penalty against Facebook for its broken privacy promises. Finally, Facebook wields interoperability like a weapon, excluding potential rivals from the social media giant’s services. Any upstart social network or web service needs the ability to interface with Facebook. Facebook often welcomes new companies that complement Facebook’s services or increase Facebook’s audience engagement, but then casts them out the moment they become a competitive threat. This is what happened to Vine, a video- sharing app; starved of access to Facebook, Vine quickly died, robbing consumers of another potential Facebook alternative. The lesson is clear: If Facebook can’t buy a rival, it can still squash it by depriving the rival of any way to interoperate with Facebook to reach the platform’s billions of users. Few startups have the capital and wherewithal to even try to build what Facebook has already created; without interoperability, there is no hope for them. So how do we rein in Facebook’s power? Just as Facebook used interoperability to maintain its monopoly, we could use interoperability to break Facebook’s grip on the market. This is exactly what Michael Kades and Professor Fiona Scott Morton argue in a recent paper. If we require social networks to interface with each other, then we could reach our friends from any social network no matter what social network they happen to be on. This is similar to how we can call anyone in the world no matter what phone network they use, or email anyone no matter their email provider. Imagine if a Hotmail user could only email other Hotmail users; this is the social media nightmare we’re all living in, and the solution — interoperability — would make it easier for us to switch between social networks. All we need is antitrust enforcement or a federal regulator to mandate it. Facebook has become so ingrained in our society that it’s difficult to remember what life was like before it reigned supreme. This is what happens when a powerful, far-reaching company makes a concentrated effort to either push, buy out or starve potential rivals. To worsen matters, we’re unable to increase competition in the market or address Facebook’s societal threats because Facebook itself is accountable to no one, and as consumers, we’ve got nowhere else to go to escape its grasp. If we want to loosen Facebook’s grip on all of us, then we need antitrust law enforcers and regulators to force social media companies to provide interoperability so we can reach our friends on any social network. The rise of one dominant social network was no accident. Our response should be just as calculated if we want to unwind that dominance. Alex Petros is policy counsel at Public Knowledge. Gene Kimmelman is a former U.S. Department of Justice official and a senior advisor at Public Knowledge. Unfriending Facebook: What we can do about the social media giant’s dominance ANTI -COMPETITIVE CONDUCT SUNDAY, OCTOBER 25, 2020 | | Opinion Special Section G5 “Facebook has become so ingrained in our society that it’s difficult to remember what life was like before it reigned supreme.” – Alex Petros and Gene Kimmelman