Wednesday’s lawsuits in the US against Facebook’s market power are the latest escalation in the battle between regulators and tech giants that could reshape the social media industry.
In a significant step taken in the growing clash between regulators and monopolies, US government and state lawmakers filed antitrust suits against Facebook on Wednesday, accusing the company of crushing competition to cement its market dominance.
The suits against the tech giant were submitted by attorney generals in 46 states and the Federal Trade Commission (FTC). They propose Facebook should be broken up based on its monopolisation of the social media market.
Filed in the US District Court for the District of Columbia, the it underscores a rising bipartisan and international antitrust sentiment, as governments have begun to zero in on the grip that Facebook, Google, Amazon and Apple maintain on commerce, electronics, social networking, search and online advertising.
The complaints centre on how Facebook bought Instagram and WhatsApp to stop competitors from entering the market and challenging its monopoly power in social networking. Once becoming a monopoly, it then raised prices and eroded user experiences to profit from anti-competitive behaviour, while spying on users in the process.
Enforcers proved their case with internal emails showing that the company deliberately engaged in acquisitions to eliminate competition and hijacked user privacy when there was no other game in town.
In one 2008 email highlighted by the FTC, Facebook CEO Mark Zuckerberg wrote “it is better to buy than compete.”
Facebook’s main defence is that the government allowed mergers and anti-competitive behaviour in the first place – and that’s true. Regulators failed to enforce the law when those mergers and countless others like it were taking place.
Regardless of what happens next, some antitrust experts have noted that the lawsuits will likely take years to resolve.
Antitrust push back picking up steam
The case against Facebook comes shortly after the US Department of Justice’s sweeping antitrust suit against Google in October to stop the company from “unlawfully maintaining monopolies through anticompetitive and exclusionary practices in the search and search advertising markets.”
Despite for years knowing the harm that Big Tech monopolies were having on the public, a guild of technocratic antitrust experts and economists refused to take monopolisation seriously and even endorsed their lawlessness – to the detriment of much more than just fair business competition.
One of the biggest repercussions has been the massive collapse in news financing and the hollowing out of journalism.
Last week, Australia finalised plans to make Facebook and Google pay its media outlets for news content, the first move of its kind aimed at protecting independent journalism that has been strongly opposed by the internet giants.
The law, which amounts to the strongest check of Big Tech’s market power globally, follows three years of grueling inquiry and consultation that spilled into a public scuffle in August when the US firms warned it could force them to consider withholding their services in Australia.
The UK also has plans to impose a new competition regime that will be enforced by a unit within the Competition and Markets Authority (CMA), in order to prevent Facebook and Google from using their dominance to swallow up smaller firms and undermine consumers.
According to the CMA, the two companies enjoy a duopolistic hold over digital advertising, accounting for approximately 80 percent of the $18.7 billion spent in 2019.
Big Tech’s gain has been news publishers’ pain
Earlier this month, Canadian news media publishers applauded the Canadian government for standing up to internet giants in their annual fiscal update, while renewing calls for Ottawa to take action to level the playing field for local newspapers.
A News Media Canada report details the ways in which Google and Facebook use their monopoly power in Canada to scoop up 80 percent of online advertising revenues and to distribute newspaper content without compensation.
That situation mirrors a new alarming US Senate Report, which illustrates the urgency of the situation for local news. It describes how the two companies have put out more than 2,000 local newspapers – more than a quarter of all papers published in the US – out of business over the past 15 years, creating “news deserts” across the country.
Until recently, most countries have stood by as the concentration of online advertising by Facebook and Google starved newsrooms of their main source of revenue, bringing about chronic layoffs and shutdowns.
Data is now the key input into advertising; and Google and Facebook know exactly who is looking at every ad, and their competitors for ad dollars – newspapers do not. Instead, publishers have to rely on the two giants to reach their customer base, and hand them valuable subscriber and reader data while undermining their bargaining leverage and enabling new forms of falsified content into the information ecosystem.
Masquerading as publishers, Google and Facebook are not in the journalism trade; they are communication businesses running information utilities with revenues siphoned away from news publishers.
Meanwhile tech firms have started to take steps to forge commercial agreements with publishers, in part to address the growing wave of government and regulatory interventions in the EU, Australia and the US.