Facebook is a ‘whole different animal’ and may not be able to exist in its current form under a new regime: expert
The Trump Administration is laying out a plan to launch an antitrust suit against Google. Yahoo Finance’s Brian Sozzi and Alexis Christoforous discuss the lawsuit, and President Trump’s railing against social media giants with Econ One Managing Director, Hal Singer.
Video Transcript
BRIAN SOZZI: Google and the rest of big tech are back in the sights of Washington. The Trump administration is laying out its plan to launch an antitrust suit against Google, while also pushing to change a law that gives immunity to social media giants. Hal Singer closely watches tech and antitrust at Econ One, and he joins us now. Hal, good to see you again. So how concerned should Google be?
HAL SINGER: I think they should be pretty concerned. The suit is coming. And as you mentioned, the immunity shield that they have used– not just Google, but other dominant tech platforms– have used to push off certain liability suits might be coming down as well.
ALEXIS CHRISTOFOROUS: Hal, I want to turn to that changing Section 230 of the Communications Decency Act. We know President Trump continues to rail against social media, now you have the Justice Department out with its proposal to take away some of those legal protections. Is this really going to make a difference at the end of the day, do you think, for these big tech companies?
HAL SINGER: Oh, sure it will. Amazon, just to pick on one, has been successful in part at using that shield to push back certain lawsuits depending upon the state in which those suits were brought. So I could see a pairing, maybe not exactly along the lines of what the DOJ suggested, but for example, saying you can no longer use the shield in the sale of physical goods. This was never the intention of Congress originally. It was always about ideas. And so if you’re selling a counterfeit Chinese battery that some child swallows, you shouldn’t be shielded from the liability suit that would come.
BRIAN SOZZI: Hal, what would the worst case scenario be for Google in your view?
HAL SINGER: Well, the worst case for the 230 that we’re still talking about? I mean, I presume we’re still talking about that. Worst case is that they would now be opened up for lawsuits and being held responsible for the kind of things that are going across the transom on their platform.
ALEXIS CHRISTOFOROUS: Hal, how likely does a breakup of any of these big tech companies look to you, regardless of who’s in the White House?
HAL SINGER: Well, the breakup could come in one of two forms. Everyone thinks that it’s going to come, potentially, at the end of a successful antitrust lawsuit, you know, in five, six, seven years. But a breakup could also come via legislative fiat. You know, when senator Elizabeth Warren talks about a breakup, she’s talking about one that’s written into law, right? And so the question is whether or not she could gather a collection of Democratic senators to get on board with that, and ultimately whether a President Biden would be willing to sign on.
But short of the breakup, you know, there are a lot of other remedies that we could enforce, beginning just, for example, with a non-discrimination regime, which would be a– which would be another regulatory solution. So it could happen, but it’s– you know, it’s probably a low likelihood event.
BRIAN SOZZI: Hal, a breakup of Google, a Facebook, you name it– wouldn’t that just cause another entity that has a significant amount of power too?
HAL SINGER: Well, it could open up the possibility for a new entity to move in. I don’t know if it would open up the possibility for a new entity to come in and monopolize the way that Google has. So I think it’s a very viable and plausible and elegant solution. And it ought to be on the table alongside other, less invasive remedies, including, for example, this nondiscrimination regime that I spoke of.
ALEXIS CHRISTOFOROUS: Which big tech company is most at risk? Is it a Google that would make most sense to be broken up? Is it Facebook?
HAL SINGER: Well, you know, Facebook– it’s difficult to think about the different parts of Facebook. One natural thing we could do is that we could go rollback all the acquisitions that Facebook made. But I think that what’s very interesting is that Facebook defies convention. The way that Google has, you know, gotten into the content space and now leverages its platform power into content, we can take care of that with either a structural solution or behavioral solution– nondiscrimination. Amazon the same thing– they’ve used the private labels to kind of leverage their platform power and steer users into search of their own wares, and everyone recognizes that’s unfair.
And again, it lends itself to these very traditional forms of relief– you know, either structural separation along those product lines or a non-discrimination regime. When you come to Facebook, what it’s doing, you know, the way that it’s kind of propagating misinformation, causing extremism, undermining democracy– it largely defies kind of these conventional tools. And so I think we have to think about Facebook in a very different way, including just dismantling it– dismantling the entire business practice, potentially banning, for example, targeted advertising. This is a whole different animal, something we’ve really never confronted before. And Facebook may not be allowed to exist in its current form under a new regime.
BRIAN SOZZI: Hal, before I let you go, back on the Google potential antitrust suit, how long would it take before a decision is rendered down? Is this– are we looking at tech gig here? Is it a year? What’s typical for something like this?
HAL SINGER: Antitrust is slow. I mean, I did an analysis that looked at cases that I think ended around 2000, and even then just to get a resolution in the lower court, the district court, took you on the order of three, 3 and 1/2 years. But if you’re talking about appeals to a federal court and then ultimately up to the Supreme Court, we could be looking at five, six, seven, eight years. And so the problem here that I keep stressing is that we cannot wait seven, eight years to solve this innovation problem.
If we’re worried that Google is leveraging its power into the edge and making it difficult for independent content creators to survive and thrive, we cannot wait seven years. So I’ve been pushing– even alongside a suit, I’ve been pushing for a regulatory solution that would bring some relief to the edge in our lifetime.
BRIAN SOZZI: All right, we’ll leave it there. Hal Singer of Econ One, always good to see you.
HAL SINGER: Good to see you. Thanks for having me.
