Commentary: Antitrust law should change Facebook and Instagram’s relationship status

SINGAPORE: Facebook is uncool, my students say. Parents and other relatives are there. So are teachers like me. 

Students have Facebook accounts. They use them mostly to post photos of milestones they don’t mind their relatives seeing, like convocation. 

Instagram is where they spend their time.  

Surely this can’t last. Facebook was cool with students from about 2007 until 2015. Instagram should become uncool any day now. After all, some teachers like me are getting the hang of it.  

READ: The awkwardness of using Instagram as a 50-something, a commentary

What will be the next social network? There are no obvious contenders. Back to Facebook? 

Facebook owns Instagram, so the two have little incentive to innovate as long as users who tire of one simply go to the other. 

Many of my colleagues who teach communication agree that Facebook is uncool, or more precisely, unethical. Its freewheeling sharing of customer data—and slow response to fake news on its platforms—are their reasons. 

We’re all stuck, choosing between Facebook’s giant networks.  

READ: Someone needs to do something about Facebook — but what? A commentary

ANSWERS FROM ANTITRUST LAW

Social networks could benefit from more competition. Antitrust law —called competition law in many jurisdictions, including Singapore — has potential answers. This is the type of law that the Singapore authorities used in 2018 to fine Grab and Uber for their merger.

The most drastic solution? Antitrust regulators could force Facebook to sell Instagram, and maybe WhatsApp too. It’s worth considering. 

Under United States law, the Clayton Act of 1914 enables the government to prohibit or undo mergers and acquisitions of competing firms.  

If Facebook and a completely independent Instagram were competing for our attention, the theory is that they would innovate faster to avoid losing users. 

Networks might roll out more features. Users of the Chinese social media giants rave about features, including the integration of e-commerce and digital payments, that Facebook’s networks lack. 

Maybe Facebook and Instagram would even compete on dimensions like how much they protect our privacy.

Antitrust experts are increasingly advocating a Facebook breakup. Notable is Professor Tim Wu of Columbia Law School, who in 2018 published the book The Curse of Bigness. The Freedom from Facebook campaign also urges antitrust action.

READ: The real reason Google and Facebook should be broken up? China, a commentary

Over a century ago, America lawmakers passed antitrust laws to thwart monopolies that reduced consumers’ choices. Standard Oil controlled 90 per cent of the oil business, and slashed prices to put competitors out of business. Regulators broke it into dozens of independent, competing companies.

In November, President Trump said his administration is looking into antitrust action against Facebook and other tech giants. 

Facebook will be well armed for the battle. In November, it hired away a senior US Justice Department antitrust lawyer for its own legal department. 

Just days ago, the New York Times reported Facebook’s plans to integrate its messenger platforms — WhatsApp, Instagram’s messaging, and Facebook Messenger — by integrating their infrastructure. The move would further reduce distinct options for consumers, and make splitting up the company more difficult, but not impossible.

Regulators from the United Kingdom and the European Union are also exploring options. In December, the UK Parliament released emails of Facebook executives, obtained for its investigations, that show possibly anticompetitive conduct. 

In a 2013 email, Mark Zuckerberg personally decided not to enable users of Twitter’s video-sharing app, Vine, to find their Facebook friends on Vine. 

Many nations have law regulating competition in their jurisdictions, though things get complicated when global social networks are involved. 

Individual nations may be able to take action against Facebook. But if the goal is a global split of Facebook and Instagram into competing firms, it would probably take the American authorities to force a sale of Instagram.

HOW WE GOT HERE, AND HOW TO DIG OUT

There’s a simpler alternative to breaking up a corporation: Not letting it acquire its competitors in the first place. 

United States and European antitrust regulators didn’t flinch when Facebook acquired Instagram in 2012 and WhatsApp in 2014. 

In 2012, UK regulators didn’t see Instagram, a camera app, as a direct competitor to Facebook. They said, “Consumers take and upload photos, but do not spend a significant amount of time” in Instagram’s app, so it presents few opportunities for marketing. 

American antitrust regulators may have reached similar conclusions, but they don’t publish their reasoning for letting the acquisition proceed.  

Facebook no doubt recognised Instagram as a potential competitor, but the regulators lacked foresight. Though Instagram focuses on photos, it is, after all, a social network where many users now spend more time than on Facebook. Advertising is now fully integrated. 

How the American authorities have enforced antitrust law in the last half century presents obstacles to taking aggressive action against social networks. 

In recent decades, American regulators and courts have focused antitrust analysis narrowly on whether consumers pay more because of a monopoly, rather than broader questions about consumers’ choices. As a result, antitrust enforcement has waned.

Regulators haven’t broken up a firm since 1982, when they split the AT&T telephone company into regional telephone companies. Twenty years ago, antitrust regulators sought to break up Microsoft, which was bundling its Internet Explorer browser with its operating system, but the case was settled with conditions short of a breakup. 

If the question the authorities ask is whether social network users pay more because of Facebook’s acquisition of Instagram, the answer is no, because social networks don’t require users to pay in dollars. We “pay” with the data we disclose, which the networks use to sell advertising targeted to us. 

If the question the authorities ask is whether the acquisition has undercut competition — consumer options — the answer is surely yes. 

That’s the question regulators should ask. American authorities should revive interpretations of anti-trust law that focus broadly on whether competition is suffering.  

A breakup of Facebook is worth considering. It’s too early in the history of social media for winners and losers to have been decided, and for the winners to have the same owner and little incentive to innovate.  

Less drastic measures, like fines for reducing competition in a country—such as the fines that Singapore, then the Philippines, imposed for the Grab-Uber merger — help increase the pressure to preserve competition. 

READ: Grab, the new ruler in town, and the paradox of scaling a business, a commentary

We can also learn from the past. If Facebook attempts to buy another social network — like Snapchat, which it attempted to acquire in 2013— consumers around the world should howl their disapproval. Regulators should prevent it. 

THE CASE FOR MULTIPLE NETWORKS

I don’t believe that deleting one’s Facebook account is the answer for individual users who are dissatisfied with it. What we’ve all built — a network that connects so many of us globally — has value. 

Facebook has allowed me to stay in touch with alumni of the school where I teach. It’s good for preserving these low-maintenance relationships with people from different eras of our lives. It was better while everyone was still building their networks and posting regularly. 

If large numbers of users quit or go dormant on Facebook — and maybe on Instagram too — and competitors were to proliferate, what would the downside be? 

The textbook answer is that a network gains value, to its users, when more people join. It loses value as people leave or become less active. 

Bigger is better. A social network impresses us when we meet people from across the street, and across the planet, and can stay in touch with all on the same network. 

If users of the big social networks — Facebook’s 2 billion users, and Instagram’s 1 billion — disperse into smaller, disparate networks, Facebook would no longer be fulfilling its stated mission of “connecting the world”. We’d lose something if no big global network took its place. 

Even though the textbooks tell us a network’s value increases with more users, my students remind me of another perspective. 

There’s value in not spending time on the same network as everyone you know. 

We can learn from young people who are happy to maintain accounts on multiple networks. They post occasionally to Facebook and regularly to Instagram. For chat, they occasionally use Facebook’s apps — message services of Facebook and Instagram, and WhatsApp — but chat most with peers on Telegram. 

How willing would you be to join a new social network? It would be a hassle to send out friend invitations again. The law also has a possible antidote. Platforms could be required to let us download our connections and transfer them to other platforms, if our connections consent. 

Maybe the rise of a new social network is not such a remote possibility, especially if the network offers innovative features. Many of us might enjoy exploring new social networks, just as we travel in different social circles offline.  

To restore competition, I’ll be rooting for the regulators to break up Facebook and Instagram. Meanwhile, if another network starts to gain momentum, sign me up. 

And this time, I may even pay attention to the privacy policy. 

Mark Cenite teaches media law and is Associate Chair (Academic) at the Wee Kim Wee School of Communication & Information at Nanyang Technological University.