11 May 2019

What’s the point of breaking up Facebook?


The size and power of big tech is one of those things about which more and more people seem to agree that Something Must Be Done.

And so another New York Times column calling for Facebook to be broken up would look fairly unremarkable. Until you realise that its author is Chris Hughes, who co-founded the social network with Mark Zuckerberg at Harvard 15 years ago.

His complaints about the social network are familiar and, in many cases, well-founded.

He is angry about Facebook’s slapdash handling of private data and slow response to foreign interference in the 2016 US presidential election. He is worried about the power that comes with the ability to control what billions of users see in their newsfeed – and who is allowed to post on the site at all. He is frustrated that he finds himself staring mindlessly at his Instagram feed when he could be playing with his son.

While Hughes’s claim that ‘Mark’s influence is staggering, far beyond anyone else in the private sector or in government’ surely overstates things, it is hard not to share at least part of his frustration at the way in which the world’s largest social network has conducted itself in recent years.

The question then becomes what should be done. Hughes’s specific suggestion is for the acquisitions of Instagram and WhatsApp (in 2012 and 2014 respectively) to be undone – and for further acquisitions to be blocked for several years. It is a plan whose supporters include Senator Elizabeth Warren, who is running for president.

But what would be different about this slimmed down Facebook? It would still have a huge amount of power over the interactions between its more than two billion users, who on average spend an hour a day on the platform. Its nightmarish content moderation operation would be no simpler. The free speech dilemmas of who should be banned from the site would be as difficult and controversial. The scope for abuse of users’ privacy and misuse of their data — accidental or otherwise — would be undiminished.

And it is far from obvious that Hughes’s proposal would significantly boost the vibrancy of the market in social networks. He argues that breaking up Facebook would mean a market in which consumers ‘could choose among one network that offered higher privacy standards, another that cost a fee to join but had little advertising and another that would allow users to customize and tweak their feeds as they saw fit’.

What are the barriers that those potential competitors face that would be weakened by the break up? The answer is the network effect: it make sense to be on the social network that everyone else is on. It’s a difficult and largely unavoidable problem for competitors. But as Facebook’s own rise proved, it isn’t insurmountable. Nor is it something that Hughes’s proposal would do very much to tackle.

Even if we assume that the break-up would allow competitors to flourish, a more fractious social media landscape is not necessarily a happier one. And it isn’t one in which the incentives for social networks to act more responsibly are any stronger.

Indeed, as Hughes acknowledges, ‘more competition in social networking might lead to a conservative Facebook and a liberal one’, creating exactly the sort of filter bubbles that so many are so worried about.

The source of the confusion behind all of this is a basic category error: Hughes and others are mistaking political problems for an economic ones. The issue is not high prices, but the role of social networks in public and private life. Those are deep and difficult questions. But they aren’t ones that have very much to do with Facebook’s market share.

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Oliver Wiseman is Editor of CapX.