I Changed My Mind—Facebook Is a Monopoly
I thought it was possible to compete fairly against the world’s largest social media company. It isn’t.
By Mark Weinstein
Oct. 1, 2021 2:05 pm ET
ILLUSTRATION: CHAD CROWE
I’m the founder of MeWe, the ad-free social network with data privacy and no content amplification or newsfeed manipulation. MeWe competes directly with Facebook. On June 27, 2019, I wrote an op-ed in this newspaper headlined “I Compete With Facebook, and It’s No Monopoly.”
On Aug. 6, 2021, I was contacted by the New York state attorney general’s office, which, along with the Federal Trade Commission, is leading a 46-state antitrust investigation of Facebook. On June 28 a previous case was dismissed by a federal judge, who said the states failed to prove Facebook was a monopoly. The FTC filed an amended complaint on Aug. 19, which listed MeWe as one of Facebook’s few competitors left standing. In tandem, the attorneys general are seeking an appeal and requesting my perspective. Facebook has responded by denying that it’s a monopolist and calling the FTC’s lawsuit “meritless.”
I’ve changed my mind. MeWe continues to succeed, albeit on a modest scale. Two years ago the platform had five million users and no revenue. Today it has nearly 20 million users and is breaking even with millions of dollars in revenue. Yet despite MeWe’s growth, Facebook’s troubling actions over the last two years have caused me to change my position, for six reasons.
First, on July 28, 2021, Mark Zuckerberg declared Facebook will transform itself in the next five years from a social-media company into a “Metaverse company.” Facebook plans to spend billions of dollars and use virtual-reality technology from Oculus and other companies it has acquired to create a three-dimensional digital universe. Facebook plans for everyone to be totally immersed in the Facebook ecosystem at all times. No upstart has the advanced technologies, infrastructure, resources and massive user base required to build a competing “Metaverse.” This will be the capper to Facebook’s dominance.
Second, on July 14 Facebook announced plans to pay content creators more than $1 billion by the end of next year to post original content on Facebook and Facebook-owned Instagram. In comparison, TikTok, the world’s most downloaded social app not owned by Facebook, is offering creators up to $200 million for original content—only 20% of Facebook’s content budget.
Content is the backbone of a social network; modestly funded social-media companies can’t compete for creators and their content at this price scale. Those creators, moreover, have every reason to avoid smaller platforms, since an offended Facebook may reduce their reach and their payments.
Third, on Oct. 25, 2019, Facebook introduced Facebook News, a new section of its platform for news stories. Facebook has collaborated with hundreds of major news outlets world-wide and pays many of them for their content. This presents the possibility of a truly problematic quid pro quo. Facebook could refuse to renew its payment agreements or suppress the reach and distribution of those news outlets if their content includes articles that are unfavorable toward it. Alternatively, Facebook could reward and amplify those news companies and articles of which Facebook approves. In February Facebook banned all news outlets in Australia after Canberra threatened to charge Facebook a fee for news. According to Pew Research, approximately one-third of Americans get their news from Facebook.
Fourth, when Facebook is unable to purchase an emerging competitor, it goes on a warpath to destroy the threat. Snap Inc. created a dossier called “Project Voldemort” documenting Facebook’s anticompetitive behavior. According to the report, Facebook not only cloned Snapchat’s features but discouraged content creators from mentioning Snapchat and blocked its content from trending on Facebook. MeWe, too, has documented reports from people whose Facebook posts mentioning MeWe were suppressed or flagged as spam.
Fifth, the glue that holds it all together is Facebook’s monopoly over data. Its ownership and control of the personal information of Facebook users and nonusers alike is unmatched. With that control the social-media giant can manipulate our thoughts, votes and purchase decisions. Yael Eisenstat, a former CIA officer turned Facebook consultant, has said: “Facebook knows you better than the CIA ever will. . . . Facebook knows more about you than you know about yourself.”
Cambridge Analytica’s CEO even bragged that he has data points and psychological profiles, courtesy of Facebook, on all 220 million American adults. Facebook’s data troves give it unrivaled knowledge about people, governments—and its competitors. Facebook even acquired a VPN app called Onavo to snoop on iPhone users and track competing apps. Onavo was eventually kicked out of the App Store for violating Apple’s privacy policies.
Sixth, 3.14 billion people use Facebook-owned products, including Facebook, Instagram, WhatsApp and Messenger. That’s nearly half the human population. Despite the recent furor over the now temporarily “paused” Instagram Kids, Facebook already targets children 6 to 12 with its Messenger Kids app. This is Facebook’s plan—to keep everyone of all ages immersed in Facebook’s products throughout their lifetimes.
While social-media companies like MeWe, Snapchat and Twitter can grow to hundreds of millions of users, Facebook’s market power and monopolistic behavior prevent any social network from challenging its top position. Facebook’s giant footprint and anticompetitive actions—purchasing emerging upstarts or cloning their features—prevent countless startups and would-be competitors from having a chance to succeed at all.
So I’ve changed my mind. Facebook is a monopoly like the world has never seen. It has more power to influence, manipulate and change thoughts, opinions, votes and purchase decisions on a global scale than any nation or government. It has an army of lobbyists who stymie effective regulation or oversight.
What to do? Decoupling Facebook from Instagram, WhatsApp and other apps it owns is unlikely to be sufficient. They would all work in tandem with the same underlying modus operandi. They would operate in the same data ecosystem, in which social-media user data is shared with advertisers and marketers across platforms. A Facebook breakup may even follow the same destiny as AT&T Corp. , which was broken up by federal regulators into “baby bells” in 1984, only to have many of its parts merged back together over the years.
More privacy laws and regulations are unlikely to solve the problems either. Facebook repeatedly pretends to support and champion privacy regulations, which it then ignores and violates. The company then pays the fines it incurs as a “cost of doing business.” One example: In 2019 the company announced it would pay a $5 billion settlement for violating a consent decree with the FTC that required the company to better protect the personal data of its users.
A new approach in antitrust regulation is required to meet this challenge. The independence of content creators and news producers must be protected from Facebook’s wrath and retribution, perhaps with regulations that protect news outlets and creators from prejudicial retaliatory action. Facebook’s stranglehold on data can’t simply be regulated. It needs to be upended. There must be new support for startups and the free market such as content portability, new subsidies, tax breaks and other incentives, along with an unencumbered protection and extension of Section 230 liability protection. Competition is needed more than ever to rein in Facebook’s domination over social media, news, personal data and democracy.
In a recently leaked recording, Facebook’s chief technology officer, Mike Schroepfer, described a new device the company is building that will allow it to scan our brains and read our minds without us having to speak or type a word. What could go wrong?
Mr. Weinstein is founder and chairman of MeWe.