Breaking up Facebook won’t solve problem

A long overdue antitrust push is gaining steam. But it’s focusing on large technology companies like Facebook Inc and Google-parent Alphabet Inc, which present complex problems that classic antitrust approaches won’t always solve.
The cases are based on very standard stuff. The US Justice Department is accusing Google of illegally preserving its dominant market share in search and search advertising by paying and pressuring phone makers to install Google as their default search engine. Meanwhile, the Federal Trade Commission and a coalition of states are suing Facebook for anti-competitive behavior because of its ownership of Instagram and WhatsApp.
One aggressive, much-discussed solution is to break up the companies to dilute their influence. The government is pressuring Facebook to part with Instagram and WhatsApp, and could demand that Google spin off its Android mobile operating system.
But it’s not clear that the substantive issues that people care about with regards to technology companies would be improved by that kind of move. The best outcome might be for Big Tech to remain big, but to submit to a new framework of antitrust regulation that restricts the companies’ behaviour in all the areas of concern. The European Union is already working on a regulation-based approach to address privacy and content moderation for the tech giants.
Forced breakups might be good news for startups, some research indicates. They also might boost competition for ad dollars, driving down the prices of ads for other companies.
But it’s unlikely those are the main reasons authorities are trying to slap down Google and Facebook. That’s because both search and social networking are probably natural monopolies, meaning that one company tends to crowd out rivals. Forcing Google to spin off Android probably wouldn’t break its search monopoly; this was Europe’s experience when it won an antitrust suit against the company. Facebook and Instagram would probably be able to survive as separate social networks for a while, but eventually everyone would want to connect with everyone else on one platform. A simpler explanation is that forced breakups are a raw power play. Some political leaders feel that companies like Facebook and Google have managed to place themselves above the rest of
society, including government. They’re paranoid that Google is monkeying with search results for political purposes, and that Facebook is suppressing news to help the opposition.
These seem like expressions of a deeper fear — the fear that companies, rather than government, are now the top dog.
Governments don’t like someone else being top dog. Fundamentally, they’re organisations created for the express purpose of maintaining a monopoly on the use of force, and that DNA tends to make them
very anxious when some other entity seems like it might be out-powering them.
—Bloomberg