The Antitrust Case Against Facebook: a turning point in the debate over Big Tech and monopoly

In 2017, a 28-year-old law student named Lina Khan turned the antitrust world on its ear with her Yale Law Review paper, Amazon's Antitrust Paradox, which showed how Ronald Reagan's antitrust policies, inspired by ideological extremists at the University of Chicago's economics department, had created a space for abusive monopolists who could crush innovation, workers' rights, and competition without ever falling afoul of orthodox antitrust law.

Now, Dina Srinivasan, a self-described technology entrepreneur and advertising executive who trained Yale Law School has done it again, with a magesterial, deftly argued paper for the Berkeley Business Law Journal called The Antitrust Case Against Facebook. It's one of the most invigorating, significant contributions to a new theory of antitrust for the digital age that I've ever read, ranking with Khan's 2017 paper.

Srinivasan's paper is especially important in light of Shoshana Zuboff's Surveillance Capitalism thesis, which dismisses the idea that monopoly is the reason that Big Tech is able to control our behavior so thoroughly -- Zuboff posits that machine learning creates devastating behavior modification tools that allow tech companies to manipulate us so thoroughly that we're in danger of losing our free will.

But Srinivasan shows how Facebook came to dominate our online discourse through activities that would have been prohibited under pre-Reagan theories of antitrust, and how, prior to these monopolistic tactics, Facebook was not able to conduct surveillance on its users, having to contend with multiple, bruising PR disasters and user revolts when it tried to do so.

Moreover, Facebook's monopoly has enabled a series of moves that worsened its impact on our democracy and our markets: once Facebook became the dominant means by which people learned about the news, media companies were forced to use Facebook to promote their work, and to put Facebook tracking beacons (AKA "Like buttons") on every article, giving Facebook the power to build ever widening dossiers on 2.3 billion users.

And since Facebook also became the dominant means by which users discovered many kinds of products, merchants also put Like buttons and engaged in other surveillant integrations with Facebook, allowing Facebook to monopolize intelligence about ad performance -- that is, when an click on a Facebook ad yielded up a sale, Facebook often knew about it -- and this allowed the company to charge more for ads, and to tighten its grip over the ad marketplace.

Srinivasan's history of Facebook's surveillance rollout makes link between monopoly and surveillance clear. For its first ten years, Facebook sold itself as the pro-privacy alternative to systems like Myspace, Orkut, and other competitors, repeatedly promising that it wouldn't track or analyze its users activity. As each of Facebook's competitors disappeared, Facebook advanced its surveillance technology, often running up against user resistance. But as the number Facebook alternatives could go declined -- because Facebook crushed them or bought them -- Facebook's surveillance became more aggressive. Today, with Facebook as the sole dominant social network, people who leave Facebook end up joining Instagram, a Facebook subsidiary.

So there's plenty of reason to think that Facebook's surveillance could be disciplined by competition. After all, Facebook's sole credible competitor is Snapchat: a company whose main value pitch is its privacy enhancements.

There's also plenty of reason to link surveillance with Facebook's monopoly power: after all, the last major push to block surveillance in browsers was the W3C's Do Not Track standard, which was sabotaged by a group of monoplistic Surveillance Capitalism companies led by Facebook, whose market dominance has made the W3C dependent on their largesse -- a dynamic so toxic that it led to the W3C greenlighting a DRM system after explicitly rejecting proposals to safeguard security research that would reveal covert tracking and surveillance through browsers.

Srinivasan's paper is a sprightly and readable thing, but it clocks in at 80-some pages, so you may prefer her summarizing article for the Institute for New Economic Thinking. Either way, take note of the legal maneuvers she makes, which go even farther than Khan did: Srinivasan makes a solid case that even the nearly useless Reagan version of antitrust law can be stretched to fit Facebook, in light of the case she lays out.

As for me, I'm less interested in the idea that Reaganite doctrine prohibits Facebook's activities: not when Srinivasan makes such a good case that if antitrust doesn't ban Facebook's activities, then antitrust law is failing to secure our freedom, our markets, our right to self-determination, our competition, and our fundamental rights.

This is an outstanding paper and it's the kind of thing that gives me hope for a better future, one in which Facebook finally faces the penalties for decades of wrongdoing, lying, spying and destructive, strongarm tactics.

Levels of user privacy weren’t only relevant to Facebook’s market entry; they were at the crux of the Facebook-user bargain from 2004 through 2014. Facebook consistently promised consumers it would not track their digital footprints off of Facebook itself. Facebook tried to renege on this promise in 2007 but the market was competitive enough, and had enough consumer choice, to thwart that attempt. Consumer pushback forced Facebook’s retreat. Then, when the company launched its “like” buttons in 2010, consumers were concerned that Facebook might leverage the buttons to conduct surveillance. Facebook placated consumers by assuring them that “like” buttons would not be used for tracking. Facebook’s conduct from 2004 through 2012, provides the benchmark of quality—at least with respect to commercial surveillance—that the restraining forces of competition demanded.

Competition didn’t only restrain Facebook’s ability to track users. It restrained every social network from trying to engage in this behavior. Speaking on behalf of then-competitor MySpace, owned by News Corp., one analyst commented on this dynamic: “News Corp. and Fox recognize the importance of allowing people to be alone with their friends, so they do not feel like they are being looked at by Big Brother. They understand how many competitors they have nipping at their heels right now, so they are doing everything they can not to alienate users.” In other words, competition protected people from today’s Orwellian practices.

While competition ensured that the market produced something that was good for consumers, the exit of competition greenlit a change in conduct by the sole surviving firm. By early 2014, dozens of rivals that initially competed with Facebook had effectively exited the market. In June of 2014, rival Google announced it would shut down its competitive social network, ceding the social network market to Facebook.

The Antitrust Case Against Facebook [Dina Srinivasan/Berkeley Business Law Journal]

Can Antitrust Law Rein in Facebook’s Data-Mining Profit Machine? [Dina Srinivasan/Institute for New Economic Thinking]

(via Naked Capitalism)