Mark Zuckerberg has failed to win over critics, as the government launches further regulatory actions against the social media giant.
On Thursday, The Wall Street Journal reported that the Federal Trade Commission (FTC) is preparing a potential injunction against Facebook. The agency claims that Facebook’s efforts to regulate apps have stifled competition and given unfair advantage to Facebook’s own products.
In particular, the FTC wants to stop Facebook from integrating its messaging products such as WhatsApp further into its primary platform. Regulators may seek to break-up Facebook, forcing it to jettison past acquisitions such as WhatsApp and Instagram. Blocking further integration now would be the first step to undoing past anti-competitive purchases.
In any case, the stock market reacted swiftly; Facebook stock dropped nearly 10 points (5%) from its high to low in Thursday trading:
Since the Cambridge Analytica scandals kicked off, some analysts have suggested that Facebook should split up. By having platforms such as Instagram as separate operating companies, it might help each unit maximize its individual growth prospects. Meanwhile, regulators and political opponents wouldn’t be able to bash the company for stifling competition.
Instead, Facebook has flouted critics. It is weaving its various services together ever more tightly in hopes of making it too integrated to break up. Facebook now claims that America needs larger tech giants to remain competitive against foreign rivals such as TikTok. Critics find this argument unconvincing, given that Zuckerberg was trying to acquire TikTok’s previous owner. Once rebuffed, he then labeled the video service a threat to democracy.
Last week, our Laura Hoy highlighted how Facebook’s management has used increasingly opaque and possibly deceptive language to describe its earnings and prospects.
Hoy noted how Facebook’s management has spoken in increasingly vague terms in recent quarters. That’s in stark contrast to other FAANG stocks, whose management teams have seemingly remained straight-shooters despite the mounting antitrust concerns dogging the whole big tech sector.
CCN.com’s Mark Emem pointed out how Zuckerberg and President Trump have been fostering a close relationship in recent months. Despite that, Facebook’s employees have gone in another direction, donating heavily to various Democratic nominees looking to defeat Trump.
It seems unlikely that Facebook will be able to find political refuge from these antitrust concerns, as it’s not just the Trump administration going after Facebook.
The Warren campaign has made a huge issue out of cracking down on big tech; we reported on Zuckerberg’s fear of Elizabeth Warren earlier this fall. Meanwhile Andrew Yang says consumers have a right to a “data dividend” in the same way that people have profited from other natural resources such as oil. This led Facebook’s VP of global affairs to go on the defensive, saying:
[People must] reconfigure old concepts [and] relinquish themselves of the idea that [using data] is the same as using finite resources in finite, one-off ways.
Judging from the FTC’s latest actions, though, it appears that the government will not be relinquishing or reconfiguring its data policy to fit in with Zuckerberg’s agenda.
Last modified: September 23, 2020 1:23 PM