Facebook Co-Founder Calls for Breakup of Company

Posted on May 9, 2019 by Paul Thurrott in Social with 50 Comments

Facebook co-founder—and former Mark Zuckerberg college roommate—Chris Hughes has called for a breakup of the social media giant.

“We are a nation with a tradition of reining in monopolies, no matter how well-intentioned the leaders of these companies may be,” Mr. Hughes writes in a lengthy and detailed op-ed piece for the New York Times. “Mark’s power is unprecedented and un-American. It is time to break up Facebook.”

Hughes’ rationale for this is sound.

Facebook, he says, faces no market-based accountability because of its dominance in social media. It acquired this dominance legally, by purchasing dozens of companies over the years, including Instagram and WhatsApp, and by beating back early competitors like Friendster, LiveJournal, MySpace, Tumblr, Twitter, and others.

Today, Facebook “is worth half a trillion dollars and commands … more than 80 percent of the world’s social networking revenue,” Hughes writes. “It is a powerful monopoly, eclipsing all of its rivals and erasing competition from the social networking category. This explains why, even during the annus horribilis of 2018, Facebook’s earnings per share increased by an astounding 40 percent compared with the year before.”

Hughes describes how Facebook has run amok, oblivious to laws or repercussions. It “largely ignored” a 2011 FTC consent decree that required it to not share its users’ personal information unless they explicitly agreed. And its pending FTC penalty, estimated at $5 billion, is just a “slap on the wrist” for a firm with Facebook’s revenues. Indeed, the company’s value surged by $30 billion when the rumored fine was first revealed.

“The FTC’s biggest mistake was to allow Facebook to acquire Instagram and WhatsApp,” he writes. “In 2012, the newer platforms were nipping at Facebook’s heels because they had been built for the smartphone, where Facebook was still struggling to gain traction. Mark responded by buying them, and the FTC approved … [since then,] the founders of Instagram and WhatsApp have left the company after clashing with Mark over his management of their platforms”

When it isn’t buying competitors, Hughes says, Facebook simply behaves illegally or at least unethically to shut out the competition. It blocked surging video-sharing service Vine from searching for friends on Facebook, “hobbling” the service, which shut down after just four years. And it blatantly copied SnapChat features, even those that were copyrighted. “Zuckerberg’s message became an informal slogan at Facebook: ‘Don’t be too proud to copy,’” a Wired article notes of that last episode.

Because of its cash holdings and market power, it’s now too expensive for any firm to rival Facebook, and even tech giants like Google have failed. As a result, “no major social networking company has been founded since the fall of 2011,” Hughes notes.

“Facebook is not actually free, and it certainly isn’t harmless,” he writes. “Facebook makes its money from targeted advertising, meaning users do not pay to use the service. We pay for Facebook with our data and our attention, and by either measure, it doesn’t come cheap.”

“I was on the original News Feed team (my name is on the patent), and that product now gets billions of hours of attention and pulls in unknowable amounts of data each year,” he continues. “The average Facebook user spends an hour a day on the platform; Instagram users spend 53 minutes a day scrolling through pictures and videos. They create immense amounts of data — not just likes and dislikes, but how many seconds they watch a particular video — that Facebook uses to refine its targeted advertising. Facebook also collects data from partner companies and apps, without most users knowing about it.”

Hughes’ most damning comments, interestingly, are directed at his former friend and colleague.

“The most problematic aspect of Facebook’s power is Mark’s unilateral control over speech,” he writes. “There is no precedent for his ability to monitor, organize and even censor the conversations of two billion people … In 2014, [Facebook’s algorithm-based] rules favored curiosity-inducing ‘clickbait’ headlines. In 2016, they enabled the spread of fringe political views and fake news, which made it easier for Russian actors to manipulate the American electorate. In January 2018, Mark announced that the algorithms would favor non-news content shared by friends and news from ‘trustworthy’ sources, which his engineers interpreted — to the confusion of many — as a boost for anything in the category of ‘politics, crime, tragedy’.”

As for a resolution, Hughes suggests breaking Facebook into multiple companies. And he agrees with Elizabeth Warren’s idea that the FTC should reverse the firm’s acquisitions of Instagram and WhatsApp and ban future acquisitions for several years. (He cites a legal precedent for this reversal, which is not as unique as some believe.) The change would benefit Facebook shareholders and users, and would cost the government nothing, he says.

But breaking up Facebook is not enough.

“We need a new agency, empowered by Congress to regulate tech companies,” he writes. “Its first mandate should be to protect privacy … the agency should create guidelines for acceptable speech on social media … These standards should of course be subject to the review of the courts, just as any other limits on speech are … There is no constitutional right to harass others or live-stream violence.”

Mr. Hughes is right. This is important content, delivered with clarity and intelligence. And you should read his entire op-ed piece before forming your own opinions.

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