Facebook and the FTC…Not this Again?

Just issue another “record-breaking” fine and let us get on with our lives already.

Brett Jordan on Unsplash

Facebook, Inc. will. Pay a record-breaking $5 billion penalty, and be made to submit to new restrictions and a modified corporate structure that will hold the company accountable for the decisions it makes about its users’ privacy to settle Federal Trade Commission charges that the company violated a 2012 FTC order by deceiving users about their ability to control the privacy of their personal information.

States a press release by the Federal Trade Commission in response to Facebook being fined a record-breaking amount of $5 billion for mishandling users’ personal information, that was intended to signal an aggressive stance that regulators are now taking toward the country’s most powerful technology companies.

Reports of the landmark fine emerged in July of 2019 after Facebook had just reported first-quarter revenues of almost $15 billion. Not to mention at the time the company was sitting on more than $40 billion in cash reserves. And despite all of the criticism the company has received, they recorded more than $55 billion in revenue as of the end of 2018. “What’s 5 billion to a boss?” In my 2010s era *insert rapper here* voice. And the market’s response to FaceBook having a 5 billion dollar fine levied against it, the largest in history? Shares of Facebook rose, to the stock's highest price in the past year (as of 2019). Nice job FTC.

So when I received the notification from my trusty Apple News App, that CNN was reporting the U.S. government was bringing anti-trust charges against Facebook, in what is being termed a “groundbreaking” lawsuit, I sighed, rolled my eyes, and thought: “not this again.” Today, Wednesday, December 9, 2020, New York Attorney General Letitia James announced an antitrust lawsuit against FaceBook, with one of the biggest claims being FaceBook has harmed competition by buying up smaller companies like Instagram and WhatsApp to squash the “threat” that they posed to them. Rumblings of this have been lurking for years, so the lawsuit doesn’t come as a surprise. My second thought was: “what took so long?” Perhaps one of the biggest surprises from the announcement is that Forty-Seven other state and regional attorneys general are joining the suit.

The FTC simultaneously brought a separate lawsuit against FaceBook, in a somewhat similar fashion, but taking it a tad bit further by calling for the court to unwind the acquisitions of Instagram and WhatsApp, and spin them off into independent companies. Ian Conner the FTC’s director of the Bureau of Competition, stated that the “aim is to roll back FaceBook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive.” All that statement means to me, is that this time the fine will be $5 billion and one dollar. Just so they can say it’s another record-breaking penalty.

In a statement posted on the Facebook newsroom, the company points to providing “many ways to communicate, share, and connect with people, businesses, news, and entertainment,” reminds regulators that these acquisitions were approved, and warns of the dangerous precedent a lawsuit like this can set.

“The Federal Trade Commission and state attorneys general today attack two acquisitions that we made: Instagram in 2012 and WhatsApp in 2014. These

transactions were intended to provide better products for the people who use them, and they unquestionably did. Both of these acquisitions were reviewed by relevant antitrust regulators at the time. The FTC conducted an in-depth “Second Request” of the Instagram transaction in 2012 before voting unanimously to clear it. The European Commission reviewed the WhatsApp transaction in 2014 and found no risk of harm to competition in any potential market. Regulators correctly allowed these deals to move forward because they did not threaten competition. Now, many years later, with seemingly no regard for settled law or the consequences to innovation and investment, the agency is saying it got it wrong and wants a do-over. In addition to being revisionist history, this is simply not how the antitrust laws are supposed to work. No American antitrust enforcer has ever brought a case like this before, and for good reason. The FTC and states stood by for years while Facebook invested billions of dollars and millions of hours to make Instagram and WhatsApp into the apps that users enjoy today. And, notably, two FTC commissioners voted against the action that the FTC has taken today. “


Hmm. Point taken. "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, VP, and General Counsel at Facebook, said in the statement. "The government now wants a do-over, sending a chilling warning to American business that no sale is ever final." Touche. Facebook didn’t just wake up one day and say: “hmm, maybe I’ll buy Instagram today.” I’m not in the mind of Mark Zuckerberg, and who knows, this very well could have been how the idea was hatched. The point being, these acquisitions are vetted, researched, dissected, and cleared by the FTC years ago. What changed now? Facebook has gotten too “big?” Too successful? Um, why exactly do you get into business? To produce a product or service that can add quality to a consumer, and I’m sure everyone hopes it will be a success. So what the FTC is telling me, is that if I produce a product or service that didn’t exist before, and consumers, who have the free will to choose, flock to that product or service in droves, and I become uber-successful, they can come and disrupt that business? Because they “deem” I’ve gotten too big? So I can be successful, but not too successful, and the metric for my level of success is measured by who? Politicians who are getting paid a steady paycheck, the best healthcare money can buy, surely have housing, and not to mention a job, but can’t agree on how to help the people they were elected to protect and help, who are without even the BASICS? This is what you spend your time on? Determining if a Social Media company is too successful? If too many people enjoy using it? Excuse my language but GTFOH.

Now, this isn’t a defense of FaceBook. I conducted a one-woman boycott of their services after the Cambridge scandal, because I had no idea how intrusive they and companies like them (staring at you Google and Amazon) have on your data, information, and how much of an impact they have on our lives. The influence is massive. While I understand where the government is coming from, is breaking them up the answer? Have you polled the average user of Facebook? How do you think someone who has used Facebook for over a decade will feel when one day it doesn’t work the same anymore? Or perhaps that Grandma who over the last 10 months or so, has not been able to contact their family, but thanks to FaceBook has managed to maintain some type of presence in their lives? That’s the “Big Brothers” problem. You do what you think is best for you. Ask the people you were elected to serve. What do they want? Will this add value to their lives? How much of their lives are integrated with FaceBook and other social media sites like them? What will this interruption do to them?


Breaking up Facebook is not the answer. Because at some point, there will be another one. And another one. There will always be something or someone out there trying to enter the market. Take away a choice from consumers, they will find another one. People will adapt. And then corporation X will become too big, and we will be doing this again in six or seven years or so. How about regulation? That’s an easy compromise. One of the lawmakers' biggest complaints about social media, the Big Tech Four, and all of these different technology companies is there is really no updated regulation for this industry. Gee, I wonder how we can fix that? I know! Update the laws. Spend time researching what would work better for the average consumer, look at the framework that was developed by a bunch of old, white men in wigs, who couldn’t even conceive what a computer would be, much less a social media network. Better, updated regulation is the answer. Update the laws to match the times. Trying to break up a company that has gotten too “big” (by whatever standards), because you can’t control it, is not the answer. One of Congress’ duties is to make the law, so make the law.

Thanks for listening.