It’s Time to Regulate Facebook

Calls for the breakup of Facebook are reaching a fever pitch. The social network has come under fire for its flagrant disregard for privacy and security, for allowing everyone from anti-vaxxers to Russian hackers to spread lies and hate across the platform, and – quite plausibly – for being a monopoly. Of its various sins, accusations of monopolism have been capturing the most attention lately, and are becoming the focus of conversation about whether Facebook can ever be reined in.

Some critics argue that Facebook has a monopoly neither on information, nor on social media. According to the dictionary definition of monopoly, they’re right. A monopoly is “the exclusive possession or control of the supply of or trade in a commodity or service.” Facebook has neither exclusive possession nor control of information, social or otherwise. However, its digital reach effectively makes it a monopoly online.

With great size comes great temptation

There’s no arguing Facebook is huge: its daily users outnumber the citizens of China. On a monthly basis, almost a third of the planet logs on. That kind of captive audience was unimaginable for monopolists past: archetypal examples such as Standard Oil and U.S. Steel had at best limited reach outside the U.S., whereas Facebook is a global entity with a reach unimaginable even a couple of decades ago. That puts it in a whole other category of enterprise when considering whether it constitutes a monopoly.

In fact, Facebook has exclusive control over the supply or trade in a service by virtue of the fact that it’s the largest social media platform on earth by an order of magnitude. YouTube comes close in terms of users but is only social in so far as those users can comment on videos. The closest truly social platform is Twitter at 321 million visitors per month. No other platform comes close to 2.4 billion users per month, and that figure doesn’t include users of Mark Zuckerberg’s other crown jewels, Instagram and WhatsApp. That kind of combined scale makes Facebook a monopoly, because – unlike in other industries – market share differentiates competitors exponentially in the social media world.

The vast gap in the size of user base that separates Facebook from every other social platform outside of China effectively puts it in a monopolistic position, at least in the west. This size difference confers a lopsided advantage in reach, which makes Facebook an essential service for online communication. That’s one reason why – despite repeated scandals involving privacy and security – users haven’t turned away from Facebook in sufficient numbers to hurt its bottom line. There are no effective alternatives to Facebook: LinkedIn is primarily a business network; Twitter is ephemeral and limited by its 280-character count; Google+ might have provided an alternative, but instead became an object lesson for potential Facebook competitors. Most importantly, none of these or any other social network comes close to Facebook’s reach.

Alternatives are limited

Luminaries such as Sir Tim Berners Lee have come up with various kinds of data sovereignty, portability and interchange initiatives, partly in an attempt to create a kind of transparent, open-source alternative to Facebook. There are noble instincts behind these efforts, but they all run into a brick wall: scale. Everyone hates Facebook because it’s big, and everyone uses it because it’s big. Small scale worked for open-source initiatives such as Linux because scale wasn’t critical to their success, whereas scale is essential for social networks.

The other reason these efforts are likely doomed is the people behind them: brilliant engineers. One need only look at the serial failures engineering-centric companies such as Google have made in the social sphere to understand that brilliant computer engineers are not brilliant at understanding human communication and psychology, the core of what makes social networking work. We should applaud efforts to come up with grassroots, open-source alternatives, and incorporate some of their ideas in regulating Facebook. Ultimately, however, we shouldn’t hold our breath waiting for engineers to understand what makes humans tick and come up with a Facebook killer.

The oil for the machine

Data is the new oil, and Facebook has a choke hold on a large chunk of it. That makes it a monopoly. As a monopoly, it needs to be regulated, because the alternative, breaking it up, isn’t feasible. Facebook isn’t a conglomerate like General Electric or Unilever, with business units that can be spun off into separate entities. Instagram and WhatsApp could plausibly be spun off, but this wouldn’t affect Facebook itself.

Facebook also can’t be split along geographic lines, because social media ignores geography. At its core, Facebook is an ecosystem of messaging, news feeds, media sharing and interactivity. Spin off any one of those functions and you really don’t have a social network anymore. Other elements such as groups and pages could conceivably be spun off, but to what end? No one wants to go to one social network to interact with groups, another to follow organizations and celebrities, a third to engage with friends and family, etc. The reason for the popularity of Facebook or any social medium is partly its ability to integrate these elements. Breaking up Facebook’s various functions would defeat the purpose and functionality of the whole, and invite other players to recreate that functionality in the market.

Don’t hesitate to regulate

This leaves regulation as the only effective solution. Industries as diverse as oil drilling, finance and pharmaceuticals are successfully regulated. Regulating Facebook would include three key areas:

• Transparency in advertising, data sharing and privacy.
• Control, interoperability and sovereignty of user data.
• Control, oversight and auditing of security.

Canada’s digital charter includes each of these elements. With the support of federal governments such as Canada’s, and non-governmental actors in the U.S, sufficient pressure could be brought to bear on US lawmakers to impose regulation on Facebook, even given the company’s intense lobbying efforts.

Facebook is not going away. It’s evolving. It evolved from a Harvard dormitory to the world stage. It evolved from a pure social network to a hybrid social / content platform. It’s evolving from open sharing to private messaging. It will continue to evolve, thanks to an extremely bright individual at the helm, to its scale, and to its culture of innovation. We shouldn’t hold our breath waiting for Facebook to disappear, but should put the regulations in place to make it work for society instead of against it.