(Bloomberg comment) – Even in a year when harassment of technology companies has become a two-party stimulus, last week’s hopeless attack on Facebook Inc. stands alone. The social media company is now facing dual lawsuits by the Federal Trade Commission and the 46 State Attorney General for forcibly reversing the acquisitions of Instagram and WhatsApp.
Considering this alliance of federal regulators and many states, red and blue, you might think this case is open and closed. Since Facebook is Facebook, complaints are rife with internal emails boasting about dubious goals and extraordinary motives. (Mark Zuckerberg writes at one point that “buying is better than competing.”) However, look closely at basic behavior, but the cases are weaker than they appear.
Clearly, the cleverness of allowing Facebook to buy Instagram in 2012 and WhatsApp in 2014 has come under discussion. Although some at the time thought that any company was a direct threat to Facebook’s core business, it was certainly enough to put their integrated firewall in the hands of an already dominant site. As in these cases – one can imagine that both services are a world that has grown in highly productive or desirable directions.
But the truth is that the FDC itself examined and approved both attachments, and if all the attorney generals at the time objected, they kept it to themselves. After nearly a decade the courts will decide whether it is lawful to seek reversal of course and secession. But this seems like a tough case. Facebook has spent billions of dollars on its ecosystem to integrate both services, including systems for advertising, commerce, messaging, cyber security and more, as the government progresses. At this point it is not clear how a fracture will work, let alone how to fix the many disadvantages alleged in these cases.
In other words, the competitive landscape has completely changed. Dozens of new entrants are now fighting with Facebook for attention and advertising dollars. The FTC imagines that both Instagram (a photo sharing app) and WhatsApp (a news service) may have matured into innovative and lucrative social media sites. However, it also emphasizes that Facebook does not face any stiff competition from Snap and Slack, YouTube and LinkedIn, Reddit and Discord – none of them, of course, can do this by FTC’s own logic.
Beyond all this, both cases simply insist that Facebook is an illegal monopoly. By any regular metric, it doesn’t. Facebook does not charge anything for its services, which does not mean it harms consumers. Online advertising rates have dropped by almost 40% since 2010, which does not appear to be a competitive market. As for barriers to entry, look no further than Dictoc, which was launched four years ago and now has about 800 million users. Although Facebook’s goal was to squash the competition – as some of the emails quoted quoted – the attempt clearly failed. (New York Attorney General Lydia James writes on Twitter that “Facebook has used its monopoly power to crush small rivals and expel competition.”
The lawsuits allege that the company’s rules for third-party applications were unpredictable using its site. As a condition of accessing its APIs (interfaces that allow applications to send or receive data) it is prevented from providing competitive services or promoting other social networks. It calls for solutions – but it does not justify breaking up the $ 800 billion company with 45,000 employees.
Distrust enforcement must be used in a reasonable manner, with a clear purpose. The best solutions are often available. If Congress opposes the conduct of Facebook user data, it must pass a national privacy law. If it deems the links in the technology business to be worthy of close scrutiny, it should provide the FDC and the Department of Justice with additional evidence for that purpose. The government is almost certain to initiate a review evaluation of the acquisitions it has already approved – without a clear purpose in view, to demand the most disruptive solutions – to back off. It’s good to get it right the first time.
The editorials are written by the Bloomberg Commentary Editorial Board.
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