Antitrust shouldn’t be personal or political – Antitrust shouldn’t be personal or political17th May 2019
Last week, Facebook co-founder Chris Hughes’ called for governments to use antitrust laws to break up his former company. Why? Because he doesn’t like Mark Zuckerberg as CEO, and Democrats lost the presidency in 2016. This is antitrust getting personal and political, and it’s not good.
Hughes does make ostensibly economic arguments in promoting taking apart the company he helped create, but left in 2007 to help then-candidate Barack Obama’s first bid for the White House. But in doing so Hughes largely mimics opinions of some public advocacy centers and some academics, whose points also find their way into the political arena, such as in the campaign materials of presidential candidate Elizabeth Warren.
What makes Hughes’s attack notable are (1) who he is — a Facebook cofounder and Zuckerberg’s college roommate, (2) his claim that Zuckerberg is the problem and the breakup’s purpose is largely to decrease his influence, and (3) that what triggered Hughes was the 2016 election.
What are Hughes’s concerns about Zuckerberg?
Among other things, Hughes says the CEO of Facebook is the most influential person in the world through his ability to control how Facebook works and how it’s used, all his ability to control any competitor of his choosing, all while outsmarting and outmaneuvering Congress. And he is accountable to no one.
There are serious problems with these claims. Zuckerberg didn’t make Forbes’s top ten most powerful people in the world. (He is number 13.) The magazine ranked business leaders Jeff Bezos, Bill Gates, and Larry Page above Facebook’s CEO. And Zuckerberg clearly cannot control any rival he chooses: Facebook, Google, and Amazon compete aggressively for people’s time and attention. And Chinese companies are advancing fast.
And as Facebook’s CEO, Zuckerberg is held accountable by users and customers. Despite Hughes calling Facebook a monopoly, according to Pew Research, the company faces lots of competition: 35% of US teens say they use Snapchat more than any other social media, and 32% say they use YouTube more than any other. Facebook and Instagram together are most used by only 25% of US teens. So Facebook is, at best, number three for US teens.
In online advertising, eMarketer says that Google is in the lead and Amazon is moving up fast.
Even if Hughes were right that Zuckerberg is powerful and maintains control of the company he built, is business effectiveness a good reason for attacking someone? If it is, then Hughes should be adding Microsoft (or the Bill and Melinda Gates Foundation) and Berkshire Hathaway to the list of organizations to be dismantled since Gates and Warren Buffett both made Forbes’s top 20.
What are Hughes’s political concerns?
Hughes is yet another voice blaming Facebook for President Trump’s victory in the 2016 election. He also expresses alarm that Russia used Facebook in an attempt to sow discord in the US.
Looking for scapegoats is a common reaction to failure and distress, which appear to be Hughes’s emotional reactions to the 2016 election. But blaming Zuckerberg is misplaced. Hughes himself helped put Facebook in the middle of political campaigns when he assisted then-freshman Sen. Obama to set up his political Facebook profile in the fall of 2006, and later joined Obama’s presidential campaign. And it appears that President Obama’s 2012 re-election campaign used Facebook just as extensively as did President Trump’s 2016 campaign. Facebook employees even gave Obama favorable treatment over is his Republican opponent.
Blaming Facebook for Russia’s attempts to sow discord in the US is also misplaced: the Russians have a long history of trying to influence American politics. Facebook is just one of many instruments used over the years.
Even if Hughes is right that, absent Facebook advertising, Hillary Clinton would be president, it doesn’t follow that this makes Zuckerberg a problem. It is common for politicians to win or lose elections based in part on their effectiveness or ineptness in marketing. That isn’t the fault of the marketing mechanisms.
And one of Hughes’s proposals — to have government officials regulate speech on social media — would lead to oppression, not liberty. Government officials worldwide have a long history of using their power to suppress political opposition. Despite constitutional protections, such suppression occurs in the US: The articles of impeachment against President Nixon charged that he had used IRS audits against opponents, and the IRS under Obama admitted to targeting conservative groups. Compromising the constitutional protections more would take the country further into political decline.
Are Hughes’s economic arguments sound?
The economic arguments that Hughes recites have been discredited in numerous places by myself and others. The most recent takedown was by economist Robert Crandall in the economics journal Review of Industrial Organization.
What should be done?
Elected officials and antitrust regulators should resist using antitrust to prosecute persons or businesses for any reason other than violating antitrust laws. The country will suffer if we allow the coercive power of government to be used to harm people who happen to be disliked by influential voices, or who create businesses whose services can be used to market political ideas.