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Facebook Antitrust Woes – Is the Big Tech Giant Playing Fair?

Facebook Antitrust Woes

The Federal Trade Commission recently levied a $5 billion fine against Facebook, the largest in history. In fact, the amount makes the FTC’s $22.5 million fine against Google in 2012 look fairly petty. But the magnitude of the fine speaks to Facebook’s dominance in the market raising questions about a Facebook antitrust situation. Recent Facebook acquisitions and questionable deals are causing some to delve into the issue in greater depth.

cartoon of Donald Trump holding out a note related to Facebook antitrust problems and pointing to a sad FB logo in prison
Facebook acquisitions were not just the problem, but the company’s antitrust situation—to the tune of $5 billion.

Indeed, the $5 billion is hardly large enough to cause Facebook to tremble in fear. The company generates over $15 billion a quarter in revenues. And the action resulted from compliance violations over user data privacy protections and not Facebook antitrust actions. But the decision does reflect a growing concern that Facebook has an unfair advantage in the marketplace today. Thus, examining whether recent Facebook acquisitions are simply routine business deals or a reflection of Facebook antitrust actions is deserving.

Questionable Facebook Acquisitions and Deals

It wasn’t a Facebook acquisition that got the company into its recent trouble with the FTC. Instead, it was laxity in Facebook’s privacy protections that allowed Cambridge Analytica to access tens of thousands of users’ data. But Facebook antitrust concerns were the focus of the House Judiciary Antitrust Subcommittee’s investigation recently. Alongside Google’s Alphabet and Amazon, company representatives had to face some tough questions about recent Facebook acquisitions and dealings.

Several actions have raised concerns about Facebook antitrust behaviors lately. For one, Facebook allegedly made special deals with some companies that grant privileged data access. This may have included Russian Internet giant among other notable companies. In addition, the Facebook acquisitions of Instagram and WhatsApp could have anti-competitive efforts to squash market dynamics and innovation. These are the key areas the House Judiciary Subcommittee were evaluating.

Routine Business or Facebook Antitrust Behavior? 

From Facebook’s perspective, it believes the company has done nothing wrong. Facebook acquisitions involving Instagram and WhatsApp are part of it enhancing existing tech products rather than suppressing competition. But politicians like Senator Elizabeth Warren see things differently. In addition to consolidating user data, these types of Facebook acquisitions leverage power against threats. And ultimately, this is what negatively affects open competition and innovation. It’s the same thing for Google, that owns Waze, Nest and Double-Click. Likewise, Amazon’s ownership of Whole Foods and Zappos suggests similar anti-competitive behaviors.

The issue is not simply size and market dominance but on the utilization of these assets a marketplace. Apple’s dominance in the tablet market in 2011 wasn’t a result of antitrust behaviors. Its product was simply highly desirable and popular. The same can be said of AOL in the 1990s. But Facebook antitrust concerns, as well as those of Google, Amazon and Apple today, are different. The advantages recent Facebook acquisitions and deals have allowed the company seem less routine and specifically unfair.

Solving the Big Tech Antitrust Dilemma

If the House Judiciary panel believes Facebook antitrust behaviors exist, the company could be looking at more fines. But many believe more needs to be done to deter companies like Facebook from taking unfair advantage of their position. Specifically, regulatory oversight is being encouraged in this regard. This would not only include a break-up of existing mergers and acquisitions with antitrust implications. But it would also include an oversight body to implement data, privacy, and anti-competitive protections when needed.

Facebook, on the other hand, is trying to avoid such setbacks. The company is already back-ending data between Facebook, Instagram, and WhatsApp. Thus, any eventual antitrust policies may no longer have a specific issue to target by the time they’re created. This is why some are advocating for regulatory changes and oversight of the industry over retrospective efforts of correction.  The speed of the Big Tech market evolution makes it difficult for policies to keep pace. And therefore, anticipatory strategies offer a better approach to addressing these concerns.

Facebook Antitrust Problems Are Just One of Many

The $5 billion settlement against Facebook is likely to be the first pushback against the company with more to come. The Federal Trade Commission has formed a task force with the Justice Department to evaluate all past and future Facebook acquisitions. Likewise, Facebook faces inquiries from the SEC, EU regulators, and the Department of Housing and Urban Development for various infractions. And it may need to address potential criminal investigations over some of its data deals previously made.

It would appear that Facebook’s legal department will be rather busy in the coming months. But among these issues, Facebook antitrust investigations have the greatest potential for change for the company. Given its massive revenues, additional fines are unlikely to evoke a change of heart. But regulatory oversight and policy change for Big Tech industries certainly could. The jury is still out as to whether Facebook acquisitions and deals support anti-competitive practices. But Facebook is likely quite interested (and anxious) about how all of this will play out.

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