How to update antitrust law for the Facebook era
The feds are coming after Facebook. According to Bloomberg, the U.S. Federal Trade Commission is investigating whether the social media company "violated terms of a 2011 consent decree" when the Trump-linked firm Cambridge Analytica pulled the data of about 50 million people off the platform. Coming on the heels of reports that Russian agents used Facebook to influence the 2016 election, the Cambridge Analytica revelations have sent Facebook's stock tumbling and its chief information security officer heading for the door.
The intervention by the federal agency is a welcome one, but it's unfortunately limited in scope. The FTC might level fines of over $40,000 per violation, which could certainly add up, but will probably do to little to change the overall culture of a company worth almost $500 billion. What the government needs to do is finally update antitrust law to take on Facebook.
It's no great stretch to say Facebook is practically unavoidable online. Not only is it an integral part of the web experience of hundreds of millions of people, but it even gathers information on visitors to any website with a "like" button. In that sense, Facebook is akin to infrastructure, both for online socializing, but also advertising and data gathering online. And our online infrastructure is clearly insecure. Even though Facebook's data policies have now changed, the point is that the treasure trove of our data still exists, and we don't know how many other companies or researchers have exploited it.
The way the government traditionally has gone after such dominant yet risky companies is through antitrust law. As the name suggests, the roots of antitrust law are in breaking up trusts — that is, large, powerful groupings of companies like those that existed at the end of the 19th century. Think railroads or Standard Oil. The laws eventually expanded to include anti-competitive behavior like price collusion or the establishment of monopoly.
The trouble is that the antitrust case against Facebook — or any digital behemoth, for that matter — is no slam dunk. Regulators have been generally reluctant to interfere in online business, in no small part because the pace of digital development is so fast it can be unwise to jump in. But there is the further point that Facebook specifically doesn't appear to be doing anything that actively violates traditional antitrust rules. Instead, it's relying on network effects, that tendency of digital networks to have their own kind of inertia where the more people get on them the more incentive there is to stay. It's also hard to suggest that Facebook has a monopoly on advertising dollars when Google is also raking in billions of dollars.
But the correct response to these counterpoints isn't to throw up one's hands and let Facebook run amok with user data. It's to refocus antitrust itself, especially as it relates to the digital economy. If antitrust in its strictest sense used to be about defending the principles of an open market, in the Facebook era, it has to become about protecting the public interest against market forces. It's a stark change, but a necessary one.
The Cambridge Analytica scandal suggests that the mere existence of an enormous international network that holds data on its billions of users is itself the risk. And the core of that risk is the aggregation of data itself. Facebook's position of dominance is less a question of market share or even appeal than it is the circular relation between what its data lets it do — appeal to our interests and marketers' interests at the same time — and their continued success despite a growing barrage of bad press.
Antitrust law has to then focus less on business practices as they relate to income, prices, or even traditional forms of behavior and more on data itself — who owns it, what rights users have to opt out, and ultimately, to what ends it can be put. A radical solution, one quite contrary to Facebook's business model, would be letting users own their own data. A less extreme case may be regulations that demand specific levels of transparency, rather than relying on voluntary action from the companies themselves.
That might profoundly reshape antitrust not as a defense mechanism of capitalism itself, but as a way to defend democracy, privacy, and user rights.
Given the enormous wealth produced by tech companies, it seems clear that their economic interests don't need special treatment. Rather, what needs to be protected is the lifeblood of the modern digital economy: data. And perhaps laws developed around the “trusts” of the early 21st century are less helpful in the digital era. What consumers need protection from is companies like Facebook that seem to repeatedly abuse our trust.