Facebook’s Horrible, No Good, Very Bad Week — And What It Means for Antitrust Reform

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An error icon on a smartphone screen is seen with Instagram, WhatsApp and Facebook logos in the background. Credit - Photo-Illustration by Rafael Henrique—SOPA Images/LightRocket/Getty Images

Facebook’s week was off to a terrible start even before its former data scientist Frances Haugen testified in front of senators on Tuesday that the network’s algorithms amplified social divisions and led teenagers to content glorifying eating disorders. On Monday, an update to the routers that coordinate traffic to Facebook’s data centers went astray, bringing a substantial segment of the world’s social media landscape to a grinding halt for more than five hours—and renewing calls for federal antitrust reforms that could dismantle the ever-growing tech giant.

The company’s catastrophic, albeit temporary, collapse didn’t render just one messaging tool unusable for millions. Its hold over three of the world’s social communications market meant several alternatives that users would normally turn to were out of commission. For many Americans with friends and family overseas, the messaging platform WhatsApp, which Facebook purchased in 2014, is their go-to app for staying in touch.

“The backup would be Facebook, and that’s true for a lot of my friends,” says Josh Palmer, co-founder of online quiz platform, Brainfall, who uses WhatsApp to stay in touch with friends in both Europe and the U.S. “For that six-hour window, 90% of the people that I regularly communicate with, I wouldn’t even have a backup.”

The outages, in tandem with Haugen’s testimony and appearance on 60 minutes Sunday, have brought fresh urgency to long-running calls from a bipartisan group of U.S. lawmakers to update the country’s laws governing monopolies to better regulate—or even break up—the company.

Little has changed about America’s antitrust laws since the Clayton and Sherman Acts passed more than a century ago. In recent years, Republicans and Democrats have increasingly voiced criticisms of Big Tech’s rise, though for different reasons. Democrats tend to argue that market concentration hurts consumers in a more general sense, while Republicans have largely focused on how large tech companies can leverage their market power to suppress certain types of political speech.

But this week, lawmakers on both sides of the aisle found common ground in their belief that the time has come to act. “When Facebook and the other platforms it owns all went down at the same time, it showed the stranglehold the company has on social media and how we communicate,” Sen. Amy Klobuchar, chair of the subcommittee responsible for antitrust policy, tells TIME. “A few online platforms failing wouldn’t become a huge news story if they didn’t dominate the entire market.”

“If you own Instagram and Facebook among other social media platforms,” Sen. John Thune, the number 2 Senate Republican, said Tuesday. “That’s an enormous amount of market power, it’s monopoly status, and I think that’s also something Congress needs to get on top of.”

Existing antitrust laws prioritize consideration of how a company’s market saturation affects costs to consumers over time. Because Facebook makes its money through advertising, and is free to consumers, its financial impact on users makes it difficult for regulatory bodies to apply standard monopoly measures. But there are signs that it might get easier soon. In June, the House Judiciary Committee voted to advance six antitrust reform bills, including one that would prevent tech companies from buying rising competitors and one that would preclude big tech from giving their own products preference over the products of competitors. (Fissures over the best way to reform the space remain; the committee markup hearing on this slate of bills took more than 20 hours.)

Facebook has been fending off complaints that it is a monopoly for years. As it happens, on Monday, as Facebook’s engineers were rushing to fix its server issues, its lawyers were also submitting a motion to dismiss a lawsuit from the Federal Trade Commission (FTC) accusing the company of squashing its rivals. The FTC first sued Facebook in December 2020, saying it purchased Instagram and WhatsApp to eliminate threats to its alleged monopoly, depriving individual users and advertisers of alternative social media options. A judge at first dismissed the FTC’s allegations, ruling that the agency failed to prove Facebook’s actions violated monopoly laws, but gave the agency the option of refiling with more substantive evidence.

Facebook’s most recent filing was in response to the amended complaint the FTC submitted after the judge’s initial order in June. “The case is entirely without legal or factual support,” Facebook wrote to the U.S. District Court for the District of Columbia on Monday. The FTC’s complaint “pleads no facts plausibly establishing that Facebook has, and at all relevant times had, monopoly power—the power to raise price or restrict output.”

Some experts and lawmakers say Monday’s outages prove exactly what Facebook says isn’t happening: that its domination of the social media landscape hurts consumers because it consolidates their options, leaving them with none when the limited options that do exist all experience system failure. “Facebook’s outage clearly showed that their monopoly has a direct impact on output,” says Sarah Miller, executive director of the American Economic Liberties Project, a nonprofit that advocates for antitrust laws.

She and other antitrust activists say the outages were proof that this monopoly power now transcends international borders, as millions of people use Facebook’s messaging platforms to streamline their communications and circumvent fees. “There are a number of countries in which Facebook is synonymous with the Internet, and WhatsApp is synonymous with cell phones,” says Miller. “We’ve exported what is a really deeply problematic monopoly all around the world.”

Rep. Ken Buck, a Colorado Republican who helped introduce the slate of antitrust reform bills, says both the outage and Haugen’s testimony are proof Facebook monopolizes social media. Facebook’s market dominance prevents social media competitors from pressuring Facebook to make its algorithms less toxic to teens, he says. “When [a healthy] marketplace starts to react to a lack of safety,” he says, “it forces the unsafe to become more safe.”

Of the timing of Facebook’s motion to dismiss, Buck says, “There’s a lot of irony here—that the whistleblower is testifying, that [Facebook was] filing this brief to the court saying we’re really not a monopoly.”

In addition to hindering individuals’ ability to communicate with one another, advocates say the server blackout harmed businesses reliant on Facebook to share information with customers. “We have food trucks who post their location on Instagram and use Facebook as a primary way of announcing where they are,” says Stacy Mitchell, co-director of the Institute for Local Self-Reliance, a national research organization that advocates against unfettered corporate growth. “Lots of businesses don’t necessarily have their own websites these days because they’re primarily relying on Facebook.”

It’s unlikely the tech malfunction on its own will persuade a judge to rule in favor of the FTC’s allegation that Facebook is monopolizing what the court calls Personal Social Networking Services, according to multiple antitrust experts. Current standards for antitrust, as interpreted by modern courts, “are so exacting and kind of pro-defendant that I don’t know if an episode like this—other than potentially informing Facebook’s market power—could have much influence on the outcome,” says Hal Singer, a leading antitrust expert, and managing director of litigation consulting firm, Econ One.

But Monday’s interruption, followed so closely by Haugen’s gripping testimony, made for a very, very bad week for Facebook—and a good week for those who have been trying to convince others it needs to be broken up.

“A couple of years ago, it seemed laughable that Congress would seriously consider breaking up these companies. It also seemed highly unlikely that Congress would reinvigorate the antitrust laws,” says Mitchell. “But every month that passes, the horizon of what is possible only extends.”

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