Yesterday the Federal Trade Commission and all but a handful of states filed suit against Facebook for abuse of monopoly power. From Reuters:
WASHINGTON/PALO ALTO (Reuters) – Facebook Inc could be forced to sell its prized assets WhatsApp and Instagram after the U.S. Federal Trade Commission and nearly every U.S. state filed lawsuits against the social media company, saying it used a “buy or bury†strategy to snap up rivals and keep smaller competitors at bay.
I believe this suit will prove to be an important development with many interesting and far-reaching aspects. For example, what will the Biden Administration’s attitude be? Will the Biden FTC end their participation in the suit? That wouldn’t stop the suit from moving forward. Will it impel changes in the behaviors of Google, Amazon?
My own view is that the suit is a mistake and would not be necessary at all if we didn’t have a do-nothing Congress (related: the House has scheduled a 101 day working schedule for 2021). If Facebook is split up, another company will stand up and do the same things Facebook has for the same reasons. What should happen is that Facebook’s business model should be made unworkable which isn’t that hard to do. The Europeans are already moving in that direction.
Facebook’s stock dropped a little on the news. Since its stock has been at all time highs it will be interesting to see if it has anywhere to go but down.
I suspect there is a misunderstanding of the motivations of the Europeans.
It isn’t to change the business model of social networking or targeted advertising; it’s to create European digital champions, digital Airbus’s. Their regulations are the means to that end.
But a rethink of the regulation regime of data collection and the digital world is needed.
I think you’re both right and wrong. I agree with you that the Europeans want European digital companies. However, they have taken privacy and data issues more seriously than the U. S. has since before Mark Zuckerberg was born.
I don’t much care why they hate Facebook and Google. Hating them because of jealousy or because of Facebook and Google’s abuse of the data they’re collecting would have the same effect.
I agree Europeans (in particular the Germans) do take privacy more seriously. But not so seriously that they don’t have newspapers with advertisements, or television with advertisements. Those are both forms of targeted advertising using sophisticated data collection.
I disagree that their motivations are immaterial. It is easy to regulate when one is not faced with issues of regulatory capture. I have no doubt the EU stance on privacy and data will change once there is a digital “airbus”.
I tend to see the issues with “digital” regulation are in other things, like interoperability, vertical monopolies, gatekeeping.