So the government’s antitrust lawsuit against Facebook failed. Where now?
Within 12 hours of a federal judge tossing out a state and federal antitrust lawsuits against Facebook, the market value of the adolescent company exceeded $1tn. Facebook became the fifth company worth more than a trillion, joining Apple, Amazon, Microsoft, and Alphabet (the parent company of Google).
What are we to make of this sudden turn of events? We have been conditioned by more than five years of criticism and concern about the growing power of Facebook to influence our politics, social lives, and economic activities to assume that the company was increasingly vulnerable to aggressive regulators around the world.
But it turns out that Facebook is far more resilient and American antitrust law far less helpful than many had hoped. When Judge James E Boasberg of the US district court for the District of Columbia ruled on Monday that the Federal Trade Commission had failed to demonstrate with sufficient evidence that Facebook had violated the law merely by getting so big and powerful – and by buying Instagram in 2012 and WhatsApp in 2014 – he was reading US law as it is.
The law is just not prepared to take on a company like Facebook as it is. There has never before been a company like Facebook – so no one knows how to interpret it backwards through legal history. Metaphorical comparisons to AT&T (broken up in 1984) or Microsoft (found guilty in 1999 of violating the law but suffered no significant penalties under a 2001 settlement) do not apply to Facebook.
Boasberg is an Obama appointee, so he’s not an anti-regulation ideologue of the sort Republicans have been shoving on to federal benches with much greater success than Democrats over the past 20 years. Nonetheless, more than 40 years of ideological warfare on antitrust law, led by a near-libertarian commitment to unfettered corporate growth and promoted by conservative law professors and judges, has rendered what was once a powerful tool for democratization largely useless.
If antitrust law can’t currently address the excesses of American companies with more reach, money, and power than any in human history, then it is in need of complete overhaul. Sadly, such overhaul is unlikely to occur within this decade. Academic legal philosophy must shift first. Then empirical studies of specific markets and companies must move minds. Then Congress must unify itself to support specific principles and reforms. And progressives must expand the fed
eral judiciary to correct for the ideological activism of Trump and Bush appointees, who currently dominate American law. All of this will take many years, if it’s possible at all.
Many excellent books and articles have been written in recent years calling for more aggressive enforcement of competition and antitrust rules to limit the growth and power of Facebook (and, perhaps more importantly, Google). Powerful senators such as Amy Klobuchar and Josh Hawley have filed bills intended to strengthen antitrust and target the big technology companies. Klobuchar even wrote a history of American antitrust law in hopes of reinvigorating the movement.
Current US antitrust law depends much more on what a company does than what it is. In other words, a layperson can look at Facebook, with more than 3b users of its various services, its oversized share of the online advertising market, and the ways that other companies, political parties, and even governments bend their practices to take account of Facebook’s reach and power, and conclude that it is a monopoly. After all, there are only two companies besides Facebook that offer services with more than one billion users: YouTube (owned by Google) and WeChat (owned by the China-based Tencent and dominant only in China).
But as Judge Boasberg ruled on Monday, it does not matter much that you or I see Facebook as a monopoly. The government failed to show that Facebook, by its actions, restrained trade or limited competition. The judge asked, appropriately, why the FTC allowed Facebook to buy Instagram and WhatsApp and raised none of these complaints in 2012 and 2014. That the Obama administration coddled Silicon Valley is undeniable. That such tender treatment is coming back to haunt American democracy is painful. The FTC has one more chance to convince the judge that its case is strong. But there is very little hope for that.
This ruling might spur Congress to seek bipartisan compromise about antitrust reform. But chances of that succeeding are also slim. Republicans like Hawley enjoy whining and screaming about how conservatives are mistreated by Facebook and Google (despite the fact that they are not). So Republicans want targeted, vengeful legislation that punishes these companies for daring to attempt to reduce hate speech and curtail calls for the violent overthrow of the US government from circulating on their services.
Democrats, on the other hand, would like to see broadly reinvigorated antitrust that would limit the excess power of pharmaceutical, telecommunication, chemical, transportation, and retail companies as well. Republicans are not interested in undoing 40 years of success at gutting democratic accountability for corporate excess. They just want to cry about Facebook being mean to them.
So don’t expect American antitrust to accomplish anything to limit the power of Facebook or Google any time soon. It’s healthy that we are having this conversation. It might make a difference over time. But it’s far from certain. Meanwhile, Facebook just gets richer and more powerful every day.
Siva Vaidhyanathan is a professor of Media Studies at the University of Virginia and the author of Antisocial Media: How Facebook Disconnects Us and Undermines Democracy. The paperback edition will be published in September