by Caroline Sutton
For much of its history as a company, Facebook led with the motto “move fast and break things.” But as talk in Washington has increasingly focused on breaking up Big Tech, Facebook has cultivated an image of powerlessness.
The company has launched an entire communications campaign in which it begs the government to regulate it, has set up its own “Supreme Court” advisory board to supposedly reign itself in, and will flat out argue that it has too much influence over speech. Even with Facebook’s latest move, in which it bans the former leader of the free world for another two years, the company still tries to thread this needle. “Would it not be better in the end for democratically elected legislators to make these adjudications and these judgements, because they’re difficult judgements, rather than a private company?” questioned Nick Clegg, Vice President of Global Affairs. “Yes. Hundred percent. Yes.”
Yet, it is hard to doubt that those inside Facebook still wish to exert enormous influence—perhaps not over society as a whole, but certainly over the future of the company. While the social network calls for regulations, there are clear attempts by the company to steer those regulations in a congenial direction. Almost all of Big Tech has ongoing antitrust issues, but Facebook may be the bellwether. Big Tech corporations are Washington’s biggest spenders, and Facebook spends the most on lobbyists. In other areas, the Facebook Oversight Board’s original members were picked by Facebook leadership, leading to questions about the entity’s independence. Given all this investment in steering their own path, why does Facebook play at surrender?
Owing to the nature of its business as well as some of its own strategic decisions, Facebook is likely the Big Tech company with the fewest allies in Washington. It is unclear how successful any Big Tech lobbying has been; a new Biden White House has reinvigorated efforts by Democrats and Republicans to strengthen antitrust laws and hold companies to account for content-moderation. As politicians on both sides of the aisle get serious about reigning in these giants, Facebook sees itself as the prime target. This landscape, combined with crucial historical precedents regarding antitrust, results in the company making the following calculation: a few regulatory concessions to avoid being broken up. Throughout history, the narrative around big business that politicians and the public have believed has greatly impacted antitrust. Facebook seems to have realized that it must steer that narrative. For now, though, the tide seems to be coming in against them.
Reagan Era: Big Isn’t Necessarily Bad
Today’s major technology companies were cultivated in a very particular era of antitrust legislation. Major antitrust law is written to be very vague and is therefore open to different interpretations, depending on the economic and political headwinds of the day.
Since the 1950s, an ideological movement has been developing in the US that stood in stark contrast to the dominant view of the post-war period. Its proponents argued that, rather than penalizing companies purely for being large, the government should take a more hands-off approach. Steps to intervene should be taken only if there was demonstrable harm to “consumer welfare”, i.e., if a merger would raise prices.
The free market approach to antitrust was created in the economics department of the University of Chicago and would become most closely associated with legal scholar Robert Bork. His work was adopted by the Supreme Court and later became official policy for the Department of Justice under the Reagan administration.
Since the 1980s, a hands-off approach to antitrust has been the norm in Washington, with two the notable exceptions of AT&T in 1982 and Microsoft in 2001. The large technology companies that dominate the sector, including Facebook, grew in an environment where they could buy similar companies with very little fear of retribution. In the long arc of American history, however, the Reagan-era approach was hardly the norm.
A Winding Road of Antitrust and Regulations
The United States underwent rapid industrialization in the second half of the 19th century. It was in 1868 that a new, powerful locomotive came into being, and these superior machines quickly spread from coast to coast. The material needs of the railroad led to booming industries in oil and steel, which, along with the railroads themselves, became monopolies by the late 1800s.
It was not long until criticism boomed, too. In perhaps the most influential reporting on monopolies, trailblazing investigative journalist Ida Tarbell wrote in her book The History of the Standard Oil Company, “There is no gaming table in the world where loaded dice are tolerated, no athletic field where men must not start fair. Yet Mr. Rockefeller has systematically played with loaded dice, and it is doubtful if there has ever been a time since 1872 when he has run a race with a competitor and started fair”. Tarbell’s reporting, released in 1902 and 1903, contributed to growing public sentiment against the monopolies, and at the turn of the century, the government took concrete steps against them.
The Sherman Antitrust Act—an ambiguously worded law that both parties promised would ensure competitive markets across state lines—was passed in 1890. Crucially, lawmakers at the time never clearly instructed how the law should be applied. This legislation, combined with the Clayton Antitrust Act of 1914 that strengthened it, was used by the federal government to sue to dissolve several of the worst offenders, including John D. Rockefeller’s Standard Oil in 1911. In the years leading up to its dissolution, Rockefeller moved away from his previous focus on secrecy and attempted to improve his company’s reputation by publishing responses to criticism that defended the company’s actions. After being broken up, Standard Oil realized how vital their public image was and hired a journalist named Ivy Lee to advise them on interacting with the media and other groups relevant to their business. Lee’s work for Rockefeller is widely considered to be the birth of the public relations profession.
Enforcement of the laws developed in this period would vary based on the political landscape of the day. Aggressive antitrust practices were abandoned during World War I, as leaders felt that they would weaken wartime production efforts. They then came back into fashion during Franklin Delano Roosevelt’s administration and were meant to encourage entrepreneurship and small-business growth. The efforts paused once more during World War II, but this time picked up again in peacetime, as Germany’s monopolies were blamed for pulling the country into war to line their own pockets. The Roosevelt administration’s approach, aided by a liberal judiciary, would be the norm in the post-war period. While Teddy Roosevelt and FDR were considered the most famous “trustbusters,” a close reading of history shows that they actually preferred regulations and reserved antitrust for only the most egregious cases. Roosevelt, for example, wanted to move oversight of big business from the judiciary to the executive branch, where large firms would be federally regulated by a Bureau of Corporations.
Now, domestic and even global politics are turning in favor of greater scrutiny on big business. Facebook in particular has been cast a tough hand. Its growth strategy has revolved around buying or eliminating competitors, which puts it in the crosshairs of any new aggressive antitrust inquiries.
There is also is little love lost between Facebook and either major American party. After Facebook’s Oversight Board recently ruled on Donald Trump’s deplatforming case, Democratic Representative Frank Pallone, Chairman of the House Committee on Energy and Commerce, stated: “Every day, Facebook is amplifying and promoting disinformation and misinformation…It’s clear that real accountability will only come with legislative action.” It is unclear if this highly polarized Congress could pass stronger antitrust laws, but at this point, Republicans seem to share much of Pallone’s skepticism toward the company. GOP senators were surprisingly receptive toward Lina Khan, President Biden’s anti-Big Tech FTC nominee during her April nomination hearing. “I believe the FTC should be doing much more to rein in the anticompetitive abuses of Big Tech,” stated Republican Senator Ted Cruz. Conservative Supreme Court justice Clarence Thomas recently expressed sympathy to arguments that Big Tech abuses its market share, noting that Facebook’s 3 billion users give it significant control over the public’s communications. The judiciary ultimately has the final say on interpreting antitrust law.
History reveals that enforcement of antitrust depends on the dominant ideology of the time. Today’s massive technology companies have enjoyed a permissive, hands-off approach since their founding. But in a time that many compare to the transition between the Gilded Age and the Progressive Era, and with a president who begs constant comparisons to prolific trustbuster FDR, it is no wonder that Facebook is nervous. Will the company’s projections of frailty help them avoid the worst case scenario—being broken up? The political headwinds seem to be against them. Let’s see if they are good storytellers.
Caroline Sutton writes on on political communication, technology, and public diplomacy. She currently resides in Wilmington, North Carolina and is a graduate of the MSc Program in Politics and Communication at the London School of Economics.
Categories: US & Canada