What Does “Breaking Up Facebook” Mean?
rebecca jordan
in Energy, Engineering, Engineering News, Engineering Recruiting, Environment, Industry News, Robotics, Semiconductors
Those of you who’ve been paying attention to the news recently might have seen some stories about the possibility that Facebook will be ordered to “break up” by regulators in the United States of America. This is a term used when corporations are judged to have become too big for their own good and are having a detrimental, anti-competitive impact on the market. While regulators have always had such powers, they’re very rarely used, and if they were applied to Facebook, it would be the most high-profile company to be broken up this way in the 21st century so far. What does it actually mean, though, and what impact might it have on you as a Facebook user or advertising partner?
If you’re worried that you’re about to lose access to your social media website or you won’t be able to place adverts on it anymore, forget that fear immediately. The Facebook website is the company’s core business and will remain so no matter what happens, but there’s far more to Facebook than just the social media network – and that, in many ways, is the problem that American regulators have with it. They’re not happy with the way that Facebook went about acquiring companies like Instagram and WhatsApp, and they might now order the sale of those sister companies in an attempt to rebalance what they see as a prejudiced, compromised market. Even then, your WhatsApp and Instagram accounts would still work – all that would change is that someone else would own and maintain them.
Given Facebook’s continual attempts to muscle in on just about every market imaginable in recent years, something like this was always likely to happen. Facebook has attempted to go toe to toe with YouTube by introducing “Facebook Watch,” tackle Bitcoin with “Libra,” and take a bite out of the popularity of UK slots site with the Facebook High 5 Casino. It hasn’t been successful with all of those endeavors. Even though the age of Facebook’s average user skews a little higher than it used to, it hasn’t managed to tempt many people away from dedicated external online slot websites. As they’ve found out, having two billion users doesn’t mean that a significant proportion of those users want to play online slots on your platform. Nor do they necessarily want to use your cryptocurrency or watch steaming content. The failed or semi-failed initiatives aren’t the ones that regulators and watchdogs have an issue with – it’s the ones that the company has succeeded with that have drawn so much ire.
Facebook will, as one might expect, fight against any attempt to break it up. CEO Mark Zuckerberg believes that regulators had the chance to assess and prevent the purchases of WhatsApp and Instagram when they happened, and as they saw nothing wrong with the deals at the time, they don’t have the right to go back now and re-assess them. A court will probably have to rule on that matter. Even if it were to happen, though – which the majority of experts feel is unlikely – there might still be material advantages to Facebook that come with the sale of some of its greatest properties. Such is the size of Zuckerberg’s empire that it’s become almost organic and impossible to manage. A new focus on core businesses might result in a more agile, energetic company capable of making faster changes and coming up with new ideas. Similarly, WhatsApp and Instagram could become even bigger if they weren’t tied to Facebook. They’d be free to work and integrate with other partners and potentially become even bigger parts of our lives than they are already.
The advantages of breaking up the companies aren’t all about agility and focus, either. If Facebook becomes smaller, it also becomes less of a target. Microsoft found out to its cost that when it resisted proposals to break it up during the 1990s, it became a political target for years, and its reputation suffered as a result. It took years to recover. IBM would be able to tell you a similar tale, and it might even be argued that IBM’s standing in the public eye has never returned to where it was during the early 1990s. If Facebook resists, the likelihood is that the politicians of the future will continue to take swings at it, and its competitors will continue to protest and call for action. Facebook might be capable of winning this battle, but Zuckerberg may be best advised to pause and ask himself if he really wants to win before he goes ahead with his defense.
As an example of what we mean, a new set of punitive penalties is currently being considered in the United Kingdom for social media companies who fail to take what’s deemed as the necessary action against illegal or hateful material posted on their platforms. Facebook, along with Twitter and TikTok, has been referenced by name and warned that if the proposed new measures are approved, they could soon find themselves liable for fines running into billions of dollars, up to and including ten percent of the annual turnover of the company concerned and prosecution of its chief executives and senior figures. It’s easy to make these types of threats to Facebook because everybody knows that Facebook has billions of dollars to pay those theoretical fines with. If Facebook were a smaller company with a lower profile and less exposure across its multiple platforms, there would be far less attention given to it either by politicians or by the world’s press.
These questions are, for the most part, matters for Facebook to worry about. For you as either a user or an advertiser, there’s nothing to worry about at all. Facebook will continue to exist no matter what, if anything, is ordered by politicians. Your other Facebook-related apps will continue to work even if they’re spun off into standalone companies of their own. From the user’s point of view, it’s doubtful that anything visible will change at all.
For Facebook and companies of similar standing, though, great changes might be on the horizon whether they welcome them or not. Don’t expect this legal and ethical battle to resolve itself anytime soon. We wouldn’t be surprised if it were still being kicked back and forth another year from now.
