April 2, 2019

Facebook and Breaking Up Big Tech

On Saturday, Facebook founder and CEO Mark Zuckerberg penned an op-ed calling for “new regulation in four areas: harmful content, election integrity, privacy and data portability… By updating the rules for the Internet, we can preserve what’s best about it — the freedom for people to express themselves and for entrepreneurs to build new things — while also protecting society from broader harms.”
Mark Zuckerberg, Washington Post

Worth noting: Facebook is facing “a lawsuit from the Department of Housing and Urban Development, as well as a policy change regarding white nationalist and separationist content,” and other forthcoming changes.
Daniel Biskup, Wired

Three weeks ago, Senator and Democratic hopeful Elizabeth Warren (D-MA) released a proposal to “make big, structural changes to the tech sector to promote more competition — including breaking up Amazon, Facebook, and Google.”
Elizabeth Warren, Medium

See past issues

From the Left

The left is skeptical of Zuckerberg’s motives, and generally supportive of the intent behind Warren’s proposal.

“All of this might sound reasonable on its face—Zuckerberg even endorsed leveling ‘sanctions’ against his own company when it screws up—but a skeptic might argue that the show of goodwill doubles as an attempt to pre-empt tougher laws. Partnering with D.C. lawmakers gives Facebook the chance to impose its viewpoint, and a front-row seat to whatever changes regulators may propose.”
Eric Lutz, Vanity Fair

“Facebook claims its users would be able to freely take their information from one network to the next, giving people the ability to choose where they spend their time while allowing competitors a fair chance at winning over audiences. In reality, Facebook already owns the lion’s share of much of the world’s social networking companies — Facebook, Messenger, Instagram and WhatsApp. And Mr. Zuckerberg is moving to integrate the messaging services he owns, further tightening the networks of users across all of his services…

“Facebook also grew to an enormous size by collecting user data when there were virtually no online privacy regulations about this practice. If laws are enacted to limit data collection in the future, Facebook may be able to squash smaller companies who want to challenge Mr. Zuckerberg’s dominance in social networking.”
Mike Isaac, New York Times  

Some note, “I know what you’re thinking: isn’t Zuck just passing the buck? Hasn’t his company very publicly failed to tackle all of the issues he’s saying it’s up to governments to fix? You’re not wrong. The four areas he’s concerned about do happen to overlap with recent Facebook scandals. But that doesn’t mean his announcement isn’t good news… Businesses such as Uber and Facebook pride themselves on being ‘disruptors’, arguing the existing rules are too outdated to apply to them at all. And until now they haven’t been keen on any new rules to replace the old ones. The change of heart should be welcomed.”
Carys Afoko, The Guardian

Regarding Warren’s proposal, “Jeff Bezos didn’t come up with the idea of owning a marketplace and using it to sell your own stuff at an unfair advantage against rivals. Reading Railroad, for example, became the largest company in the world by owning the rails that carried anthracite coal, as well as the coal mines along the route. Rival coal producers that wanted to use the lines got less favorable rates, fell behind, and got swallowed up by Reading Railroad. Congress put a stop to it in 1906 by adopting the Hepburn Act, which prevented the railroads from carrying products that they owned... Warren’s central proposal — to structurally separate business lines in an effort to eliminate anti-competitive conduct and foster competition — has a century-old pedigree.”
David Dayen, The Intercept

Some caution that “the problem with applying a one-size-fits-four model to tech… is that the large tech companies have different business models that pose different anti-competitive risks. The stranglehold that Google and Facebook have on the digital advertising market is different from the way Amazon muscles out e-commerce brands, which is different from the way Apple uses its App Store to force burdensome terms on developers…

“The possibility of unintended consequences means that tailoring regulations to address each of these problems is important. A law that banned Amazon from competing with third-party sellers on its platform could also cripple Chromebook laptops, or prevent iPhone users from getting access to their iTunes libraries. Rather than one giant package that crams everything together, a set of effective tech regulations would treat each problem [discreetly], and address each with surgical precision.”
Kevin Roose, New York Times

Regarding the Cadillac tax, “high-premium employer-based plans raise the cost of health care for everyone by encouraging the overconsumption of expensive services. This means that even Medicare and Medicaid face higher prices. Quite aside from its benefits for the health-care market, the Cadillac tax would also have the effect of expanding the tax base and making the tax code more efficient. It would raise revenues by about $15 billion a year… Rather than killing or delaying the Cadillac tax, Democrats should be trying to make it operational. The tax would raise revenue, lower costs, increase the efficiency of the tax code and give the Obamacare individual market its best chance at success.”
Karl W. Smith, Bloomberg

“The two issues with which he is most often associated, support for a balanced budget and opposition to free trade, put him at odds with both of our major political parties. An old-fashioned, soft-spoken Southerner, he nevertheless held views on so-called ‘social issues’ that would be to the left of the mainstream of the Republican Party, both then and now. He was a fervent supporter of the Vietnam POW/MIA movement in the late '80s and early '90s, but he was not in any sense a hawk. Never mind 2003. Perot opposed the first war in Iraq in 1990… Perot's death should be mourned by all Americans who regret the fact that it is no longer possible to make reasoned, non-ideological arguments about questions of public import, and by the devolution of our political life into mindless partisan squabbling.”
Matthew Walther, The Week

From the Right

The right is disturbed by the free speech implications of regulating content on Facebook, and critical of Warren’s proposal.

From the Right

The right is disturbed by the free speech implications of regulating content on Facebook, and critical of Warren’s proposal.

“Facebook's nominal raison d'etre is to serve as a space for empowering speech by people who might not have had a platform in ages past. That Zuckerberg would thus wish for government constraint over speech is deeply concerning… The founders rightly recognized that while some controversial ideas are inherently negative, others are immensely positive. But unlike Zuckerberg, they also realized that you can't get the latter without tolerating the former.”
Tom Rogan, Washington Examiner

Zuckerberg “claims that ‘we,’ as society, now have a special responsibility to facilitate his efforts to keep people ‘safe’ from reprehensible rhetoric. We have no such obligation. Facebook already offers users the ability to block or ignore accounts they find distasteful. If they don’t like how Facebook is governing speech, they can quit…

“Moreover, Zuckerberg wants to institute these plans in ‘common global framework.’ Well, Vladimir Putin recently signed a bill that makes it a crime to ‘disrespect’ the state and spread ‘fake news.’ France, who Zuckerberg says he is already working with, has passed hate-speech laws that allow the banning of political content. As do many other nations, including Canada. And let’s not forget fully authoritarian nations like China. Are those the countries that Zuckerberg trusts to assist the United States in instituting a framework for acceptable Internet speech?”
David Harsanyi, The Federalist

“The costs of regulation, such as privacy rules, are easier for bigger businesses to bear and they can create higher barriers to entry for competitors. And forgive us if we’re wary of letting politicians on the right or left dictate content decisions. Before he invites the protection of the political class, Mr. Zuckerberg should have Facebook fix Facebook.”
Editorial Board, Wall Street Journal

“Warren's anti-trust activism is based on a misreading of history and economics. She argues that it was Washington's trust-busting effort in the 1990s against Microsoft that helped give birth to Google and Facebook… These are dubious claims, at best. Microsoft didn't miss the mobile revolution because it was distracted by the Clinton administration's decision to sue the company over unfair dealings with Netscape… It's much more likely that Microsoft fell into a trap that often ensnares large, dominant firms: It simply couldn't adjust to a business paradigm shift where its model — desktop PCs running Windows — was no longer the center of the universe.”
James Pethokoukis, The Week

“Warren’s proposal is obviously formulated without taking any account of the interests of users and consumers… Why does Google provide a tool without which it’s impossible to imagine contemporary life — and has opened up vast vistas of readily available information — for free? Because it can monetize it with advertising. Without the advertising revenue, which Warren insists should be a separate business, Google has no incentive to devote engineers to constantly improving its search engine…

“Amazon doesn’t have anything close to a monopoly in food retail. Rather than taking over the sector, it’s spurring investment and innovation. The nation’s largest supermarket chain, Kroger was founded in 1883. It was slated to increase its spending on investment 200 percent in 2018, developing a self-checkout app and robot delivery, precisely because the space is so competitive. We’ve seen the same effect in retail. Falling behind Amazon, Target invested massively on improving across the board, and in one quarter in 2018, had its best sales growth in more than a decade. This past holiday season it sought to one-up Amazon by offering free two-day shipping. This is the market working.”
Rich Lowry, Politico

“Trump should be overjoyed. Tariffs are taxes paid by Americans on the things Americans buy. The only way China can be paying any of them is if something else, something extra, then happens — like the yuan dropping. This makes all imports into China more expensive for Chinese citizens. That's China paying for Trump's tariffs when the yuan falls. Without this happening, only Americans pay. With the yuan dropping, China pays as well. This is the claim Trump has been making all along, that China's really paying those trade taxes — now they are… Imposing significant export tariffs on a country should mean the value of that currency falls. This is what is happening. Why is Trump complaining about it?
Tim Worstall, Washington Examiner

“NBC and MSNBC embraced Sen. Elizabeth Warren of Massachusetts in the first debate of Democratic presidential candidates Wednesday night, treating her like the star of the show. The debate led off with Warren, who had a huge popularity advantage from the start… NBC anchor Savannah Guthrie started it off sounding more like Warren’s press secretary. ‘You have many plans – free college, free child care, government health care, cancelation of student debt, new taxes, new regulations, the breakup of major corporations,’ Guthrie said, before teeing up an economy question. Guthrie even used Warren’s plan to break up tech companies as the foundation for a question for Sen. Cory Booker of New Jersey… the round-robin final comments also ended with Warren, as Maddow asked her for the ‘final, final statement.’ That let NBC bookend the entire debate with Warren and Warren.”
Dan Gainor, Fox News

President Trump should be happy. As much as Warren is articulate, obviously intelligent, and energetically supported by Democrats, she would also be far easier to defeat than Joe Biden… Considering Trump's economy, the president is well placed to defeat Warren.”
Tom Rogan, Washington Examiner

A libertarian's take

Outside Hong Kong, the silence Is deafening… Some protesters in Hong Kong today are adopting the British Union Jack flag, the American flag and the ‘Star-Spangled Banner’ as symbols, yet that doesn’t seem to have stirred our collective imaginations… Americans are preoccupied with fighting each other over political correctness, gun violence, Trump and the Democratic candidates for president. To be sure, those issues deserve plenty of attention. But they are soaking up far too much emotional energy, distracting attention from the all-important struggles for liberty around the world…

“It’s 2019, and the land of the American Revolution, a country whose presidents gave stirring speeches about liberty and freedom in Berlin during the Cold War, remains in a complacent slumber. It really is time to Make America Great Again — if only we could remember what that means.”
Tyler Cowen, Bloomberg

On the bright side...

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