A bit over 20 years ago, social media was dominated by one company: America Online (AOL). It was a monster, and if you weren’t on AOL, you weren’t one of the cool kids. AOL’s market cap in December, 1999 was $222B (about $350B today). A month later, AOL announced that it was merging with Time Warner, in a blockbuster move that created a $350B behemoth (about $550B today). In inflation-adjusted dollars, this company would be the ninth-largest in the world today.
It didn’t last.
5 years ago, Verizon purchased the remnants of that once-behemoth for $4.4B, marking the conclusion of a spectacular collapse of a company once considered to be, in today’s terms, a social media monopoly.
Yesterday, the federal government filed suit to break up the current “big dog” of social media: Facebook. 48 states are planing to file a parallel suit.
What’s the beef? That Facebook, through its acquisitions of such potential competitors as Instagram and WhatsApp (and, we might surmise, the power to continue to hoover up competition as it arises), has excessive monopolistic control over Internet communications. So, of course, those who don’t like Facebook’s business practices want government’s sledge-o-matic to do a Gallagher on the company.
And, as sure as the sun rises, those who support this bleat “Ma Bell” the moment you dare question the wisdom of government smashery.
The aphorism “a little knowledge is a dangerous thing,” widely attributed to Alexander Pope, is on-point: Ma Bell existed as a monopoly for decades because of government. The company enjoyed monopolistic protections and was sheltered from market forces in numerous ways. To give the government credit for tearing down what it built up in the first place is like giving a doctor credit for setting your broken arm after breaking it himself.
So, as an analogy and justification for anti-trust activities, “Ma Bell” collapses under just a bit of scrutiny.
But, such deconstructions rarely abash the indignant, and there’s a whole lot of indignation over Facebook’s behaviors, both real and alleged, in recent months. The cranky-pants are, you might be surprised to read, quite bipartisan. As is the FTC lawsuit: Three of five regulators voted to proceed. Two are Democrats, one is a Republican. The Left is angry at Facebook for permitting purported misinformation and disinformation to be shared by users, the Right is angry at Facebook for intervening, censoring, and “fact-checking” stuff that doesn’t lean left enough. Even supposed libertarians on social media are jumping on the sledge-o-matic bandwagon, rationalizing intervention as a cure to the distortions that benefit Facebook (that is, those few who bother trying to reconcile their libertarianism with their indignation – many just want to smash).
There has been recent noise about removing social media platforms’ protection under Section 230 of the Communications Decency Act, which distinguishes between a content creator and a platform in which outside content is shared. Under the Act, platforms are granted immunity from suit that publishers do not have. The act of curating content, some assert, transforms the platform into a publisher.
Section 230 is a market distortion. Whether it serves the common good is its own debate, but we can consider that it wasn’t intended to provide cover for activities that can legitimately be considered “publishing.” A newspaper that curates third-party content is a publisher, even if it doesn’t pay the creators of that content. If social media platforms get into the business of curation (beyond the baseline of rejecting that which is illegal), perhaps it shouldn’t be exempt from the liabilities that publishers face. Nothing about removing that protection would violate the company’s freedom to conduct its business however it chooses to, it’d just level the playing field.
But, even without that leveling (no sledge-o-matic necessary), the AOL example should mollify the demand for more government meddling. These things have a way of sorting themselves out.
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