Facebook – We Didn’t Always Know How Facebook Would Use Its Power
As a legal matter, Facebook’s argument here is flat-out wrong. The FTC’s failure to block the acquisitions of Instagram and WhatsApp did not give Facebook carte blanche for all subsequent misbehavior. Indeed, the FTC’s letters explicitly reserved “the right to take such further action as the public interest may require.” And the FTC has intervened in other cases after initially withholding judgment. Since 2000, regulators have challenged at least four other mergers that had previously been reviewed.
The problems that some mergers can create are not always obvious in advance. When the Facebook founder Mark Zuckerberg proposed buying Instagram, his company’s displacement of the former social-networking leader, Myspace, was still being touted as proof that disrupting digital markets was easy. As FTC officials tried to peer into the future back in 2012, they might have reasonably asked whether Facebook or Instagram would even exist a few years down the road.
Today, no crystal ball is needed. Facebook is still the world’s biggest social network, more than a decade after it dethroned Myspace. And the relevant legal question—did Facebook acquire its rivals in order to stifle innovation and competition?—can be answered by looking at what the company has actually done. After buying Instagram, the FTC alleges, Zuckerberg’s firm shut down its own efforts to build a better photo-sharing app and tamped down promotions of Instagram out of fear of cannibalizing the flagship Facebook product. Those crucial facts simply weren’t available to regulators before the deal went through.
Some of Facebook’s defenders argue that any corrective action under these circumstances would be a mistake—“hindsight bias,” as two of them argued over the summer. But prosecuting an antitrust case in light of new facts isn’t a “do-over.” It’s simple law enforcement.
What’s more, regulators’ understanding of digital markets has deepened considerably since 2012. Back then, prominent legal experts—including Robert Bork, whose legal scholarship helped justify half a century of market consolidation—were arguing that antitrust laws simply don’t apply to “free” products such as online search engines and social-networking sites. But in the past nine years, many more legal scholars and regular internet users alike have come to realize that Facebook and Google don’t actually give away their products for free. Users pay for access with some of their most valuable resources—their time, attention, and personal information. Concentrating power in the hands of a few massive companies carries huge risks, even in markets without explicit prices.
With 2.7 billion active users on Facebook’s flagship product alone, no monopoly in history has spread so far and affected so many lives. The sheer size and scope of Facebook and other tech behemoths have triggered a broader reconsideration of Bork’s laissez-faire approach to antitrust. A blockbuster report issued last year by the House Judiciary Subcommittee on Antitrust explicitly called out the Supreme Court for its narrow interpretation of antitrust statutes.