There seems to be a growing concern that Facebook is too big and should be broken up. Among those calling for the breakup are Elizabeth Warren, Chris Hughes and Alexandria Ocasio-Cortez. The FTC has asked Congress to pass a national privacy law to regulate the industry. While some disagree, it seems pretty clear that foreign agents were able to manipulate voters in the 2016 election. But, would breaking up Facebook put an end to foreign intervention? Would it “help” democracy?
From an antitrust standpoint, it seems unlikely that the government would succeed in an antitrust suit against Facebook. It’s unclear if Facebook is a monopoly, and even if it were, monopolies gained by virtue of superior product, business acumen or historical accident are not illegal. It’s also not clear what breaking them up would do. One of the benefits of being on Facebook is that a lot of other people also utilize the platform. If you move 1/3 of users to Facebook Blue, 1/3 to Facebook Red and 1/3 to Facebook Yellow, users would tend to migrate to the Facebook where their friends and family are, potentially recreating the “original Facebook”. From an economic perspective, the value of Facebook is not only understanding a particular user, but finding and understanding super-users, and using that information to understand other users who may not interact with the site as much. Through a repetition of behaviors, Facebook (and Amazon and Google) can get a pretty good idea of what you like to buy, when, and at what price. They can use that model to compare you to other people who have purchased similar things. They then can develop projected demand curves for whole classes of people, and use them to sell more things to you at optimized prices. Say you find a frozen mastodon with 1/3 of its’ DNA preserved. You know some things about that animal but not a lot. Now say you find 6 mastodons each with 1/3 of their DNA preserved. You know a lot more about that species as a whole even though you still have just a few data points per specimen. The value of each specimen is enhanced by the presence of the others.
If you gave each New Facebook all of the data, you’ve just tripled your problem, because each New Facebook has a complete data set and the algorithms the data built. And there doesn’t seem to be a way to “break up” the algorithms. You can get rid of a particular user’s data, but you will still have the algorithms that predict the demand for particular things that class has. Even if you could “break apart” those algorithms, it still wouldn’t prevent the New Facebooks from regenerating them as new users join and participate.
Data extraction and assimilation is not going away. In fact, the valuations the market gives to companies like Amazon but not Walmart explain this clearly. Amazon is worth so much because it can tell sellers who will buy their products, when and at what price. Moreover, the intimacy of the user experience, where the user can be served a unique website with unique pricing and product description, means that platforms like Amazon can price discriminate perfectly and instantaneously. It doesn’t have to wait for a retail window to close. It can sell a product for more to a price insensitive buyer at the same time it’s selling the same thing at a lower price to a price sensitive buyer.
It’s this hidden intimacy that makes people call Facebook “dangerous to democracy.” Democracy depends on the marketplace of ideas, where we and our putative representatives advocate for their positions openly to the citizenry, where those ideas can be assessed and challenged. People on social medial platforms tend to like others and organizations that have significance for them. When you look at a feed, you could see your church, your children’s school, your school, your trusted periodicals, your friends, and your mother. The problem is that these organizations are not curating the content you see. You see the indicia of those organizations but cannot trust that what you’re seeing is the full and complete, unexpurgated opinions of that organization, friend or family member. Facebook edits them and does not have the same incentives as the organizations. Indeed, Facebook is incentivized not to tell you anything except what you want to hear. They are incentivized to edit out anything unpleasant that might drive you from their site—it’s your behavior on their site that tells them who you and others like you are, which is what they are selling. You actually don’t see conflicting content that might challenge some of your ideas. Ultimately, they are free-riding off the goodwill your organizations have created to sell advertisements to you.
When I was a child, I remember standing at the checkout line at the grocery with my mother and reading that space aliens had landed in Utah. I was thrilled! My mother was not nearly as thrilled, and told me that space aliens had not in fact landed in Utah despite what the periodical said. I distinctly remember going home and watching the evening news for the story to prove her wrong. Shockingly, the story didn’t run. I eventually learned that there were differences in news sources, that a story from the New York Times was different than one from the Weekly World News. Learning that difference and what sources have value to you, moreover, is not a one-off event either. It’s life-long.
This analysis suggests the best response is education, in particular civics; informing the public that they are not looking at an open marketplace of ideas where all their favorite, most trusted sources are speaking freely, but a unique unshared reality curated by an organization that makes money selling you things based on what you say and do.
Having said that, more could be done to combat false identities and foreign propaganda. Presently, platforms have no incentive to stop them, as they bring more eyeballs and advertisers to sites. Perhaps requiring all paid content to be displayed on a special site, so anyone who wants to can see all of them and their sponsors. Perhaps fine the platform for allowing political advertising where the advertiser does not verifiably identify himself and his country of origin. A more fulsome disclosure about not only what data they do pull but how they massage it to make it valuable to sellers and about how they formulate the feeds people see might also help. This would also go a long way to informing users about the value of the data they are giving and relieving some of the informational asymmetry that clouds the market. The FTC’s 6(a) investigation might be expanded to platforms as well.
“Break up Facebook” is a nice rallying cry but not practical or respectful of our First Amendment. Facebook is a new way of delivering content which needs to be understood more widely.
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