Mark Zuckerberg believes that the government will never break up big tech companies such as Facebook--because it can't.

There's a lot of talk about breaking up big tech these days. The head of the Federal Trade Commission has said he'd be willing to take that step. Elizabeth Warren is making it part of her presidential campaign platform. And in a meeting with Facebook CEO Zuckerberg and president Donald Trump, senator Josh Hawley (R-Missouri) called on Zuckerberg to voluntarily sell WhatsApp and Instagram to better protect user privacy. But, in a private meeting in July, Zuckerberg told employees he's very confident the government will never succeed in breaking up Facebook or any other big tech company because the law is firmly on their side.

Leaked audio and a transcript of that private meeting were just published by the Verge, and they're very revealing as to Zuck's thinking on this crucial issue. When an employee asked how much Zuckerberg worries about regulators breaking up Facebook, he began his response this way: "Well, I think you want to separate out a couple of things. I'm certainly more worried that someone is going to try to break up our company." 

Why is he so sure such an effort would fail? "I just think the case is not particularly strong on this," he said. "It's just that breaking up these companies, whether it's Facebook or Google or Amazon, is not actually going to solve the issues." As one very large, very wealthy company, for example, Facebook is in a better position to deal with election interference than, say, Twitter, he explained. Like Facebook, Twitter also faced an invasion of Russian operatives seeking to widen divisions among Americans and manipulate voters, but lacked the resources to address that incursion effectively.

But also, he said, "For all of the concern about the direction the country is going in, as someone running a company that operates in a lot of different countries, I have to say one of the things that I love and appreciate about our country the most is that we have a really solid rule of law, which is very different from a lot of other places around the world."

Why is Zuckerberg so confident that Facebook would win in court?

Now, antitrust law is a pretty complex thing and we can only speculate as to why Zuckerberg feels so confident that the law would protect Facebook if it was sued for anti-competitive practices. My guess is that he is looking at the way antitrust law has been applied over the past few decades and relying on the expectation that it would be applied to Facebook the same way. The federal government has been sparing in its enforcement of antitrust law and has focused on consumer pricing, specifically price gouging by monopolies that are free to set whatever prices they like with no fear of competition. That means tech behemoths like Facebook and Google that provide their products to consumers for free should have nothing to fear.

But, increasingly, both tech industry observers and legal experts have been suggesting that the price-gouging-only view is too narrow. In a recent speech in Israel, the Justice Department official in charge of antitrust rejected the consumer-pricing-only view of antitrust law, and said that "diminished quality" as a result of insufficient competition could also be cause for an antitrust suit. I think we can all agree that if courts were to begin finding diminished quality as a reason to take corrective action against a monopoly, then Facebook could be in real trouble.

For the moment, though, Zuck is much more concerned about having to fight such an action than about whether his company would win. If Warren is elected president, he said, "I bet that we will have a legal challenge and I would bet that we will win the legal challenge. And does that still suck for us? Yeah. I mean, I don't want to have a major lawsuit against our own government." But, he added, "at the end of the day, if someone's going to try to threaten something that existential, you go to the mat and you fight."

Warren, too, appears ready and willing to fight. In response to the Verge piece--which Zuckerberg is now linking to from his Facebook blog--she tweeted, "What would really 'suck' is if we don't fix a corrupt system that lets giant companies like Facebook engage in illegal anti-competitive practices, stomp on consumer privacy rights, and repeatedly fumble their responsibility to protect our democracy."

Zuckerberg has repeatedly said that Facebook should defuse governmental anger by regulating itself, and he's taken steps to do that. Still, one way or another, my guess is Facebook will find itself in a regulatory battle sometime soon.

Published on: Oct 2, 2019
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