The “Extraordinarily Difficult” Path to a Facebook Breakup

Elizabeth Warren’s plan to split up the tech giant is growing in popularity. But even if regulators can navigate a byzantine set of barriers, a successful breakup would take years to achieve.

Sen. Elizabeth Warren speaks during a campaign stop on May 11 in Cincinnati.
AP Photo/John Minchillo
May 15, 2019, 8 p.m.

On Capitol Hill, in Silicon Valley, and on the presidential campaign trail, the clamor for a Facebook breakup is growing.

Sen. Elizabeth Warren may have kicked things off back in March with her campaign proposal to split up the tech giant. But after Facebook cofounder Chris Hughes echoed her call for a breakup last week, more presidential candidates have sought to either push back or jump on the bandwagon.

If Warren walks into the Oval Office in 2021, however, she won’t be able to simply snap her fingers and dissolve half of Facebook. In fact, experts say any president looking to carve up the colossus of Silicon Valley faces a monumental task. Whether pursued legislatively or through the courts, any breakup plan will encounter an escalating series of hurdles even higher than those faced by regulators in their bids to break up AT&T in the 1980s or Microsoft in the 2000s.

“I think it would be extraordinarily difficult,” said John Lopatka, a professor of antitrust law at Penn State University. “I think however difficult AT&T was, however difficult Microsoft would’ve been, this would be much more complicated.”

Lopatka is ultimately skeptical that a breakup of Facebook would be desirable even if it could be realized. “When companies achieve their dominance through innovation, that’s not something that we, through the antitrust laws, generally want to penalize,” he said.

But supporters of a breakup also expect the road will be long and treacherous, even with a sympathetic figure in the White House.

“Just understand that this is something that you don’t do overnight,” said Gigi Sohn, a fellow at the Georgetown Law Institute for Technology Law and Policy. “That doesn’t mean it’s not worthwhile to do. But it’s not something that’s easily done.”

There are two avenues through which a breakup of Facebook could occur. The more traditional route is through the courts, with either the Federal Trade Commission or the Justice Department spearheading an antitrust case against the tech platform that culminates in a judge-sanctioned split. The other, less conventional approach would see Congress pass legislation ordering a breakup, either directly or indirectly. Both approaches would almost certainly take years and are replete with pitfalls along the way.

Warren’s Facebook proposal calls for the pursuit of both approaches simultaneously, but the 2020 candidate already has a clear preference. “I’d like to see it done through the courts because I think that might be swifter,” the senator told National Journal on Wednesday.

It’s easy to see why Warren would prefer to break up Facebook through agencies directly under White House control. But experts say that for all the gridlock and foot-dragging on Capitol Hill—especially on issues of technology—a congressional effort would still be quicker and enjoy a higher chance of success.

“If you’re asking me whether legislation is preferable to a long, drawn-out antitrust fight, the answer is absolutely yes,” Sohn said.

Warren’s plan for an antitrust action calls for the appointment of breakup-friendly regulators at both the FTC and DOJ. Those officials would need to be approved by the Senate, where they’re likely to get grilled on the question of Facebook in particular. If those regulators can get confirmed, the next step would be to open an antitrust investigation, something Lopatka estimates would take at least a year to complete.

If that investigation finds evidence of anticompetitive behavior on the part of Facebook, either the FTC or DOJ would then have to try the case before a series of judges. While details vary depending on which agency takes the lead, that case would undoubtedly take some time to resolve and require reviews by either FTC or DOJ officials at several points—and that’s before considering what’s likely to be lengthy appeals process.

“It’s at least several years, and five years wouldn’t be too out of the question,” Sohn said.

If the government can’t reach a settlement with Facebook, a judge would need to decide not only that Facebook violated antitrust laws but that the violation was so massive the only way to fix it would be to bust up the company. And Lopatka believes most judges would be “reluctant” to take such an aggressive step.

The U.S. government successfully settled a breakup with AT&T in the 1980s, and an appeal saw Microsoft narrowly avoid a split-up in the early 2000s. But Lopatka said both of those cases contained clearer arguments for a breakup than are likely to be found with Facebook.

“The breakups that took place in AT&T, and were proposed in Microsoft, were along kind of natural fault lines,” Lopatka said, noting that both companies had operational silos conducive to a geographical or functional breakup.

“What you would do with Facebook, I have no idea,” he said. “Because at this point we are talking about a fully integrated company that doesn’t have obvious divisions of responsibility.” A simple spinoff of WhatsApp and Instagram, he said, will do little to change Facebook’s social-media market share.

The antitrust jurisprudence built up over the decades would also suggest a higher bar for a Facebook breakup than in previous cases. Both Microsoft and AT&T were found to be leveraging their multiple positions in the market with the express purpose of keeping competitors out. But even experts open to Warren’s proposal say there’s little evidence the same dynamic is at play with Facebook, Instagram, and WhatsApp.

“It doesn’t really apply to Facebook because Facebook isn’t leveraging the Instagram experience to sort of maintain Facebook’s hold on the market,” said Dina Srinivasan, an academic and author of the article “The Antitrust Case Against Facebook.”

It’s also worth noting that the only successful breakup of a major company in contemporary U.S. history came when a government-created telephone monopoly agreed to be split up. “That’s a lot different from a monopoly that was built in a garage,” Sohn said. “It’s possible that AT&T actually saw benefits in being broken up.”

Unlike with AT&T, virtually everyone expects Facebook to put up a ferocious resistance. “I would think that Facebook would fight to near-death to avoid breakup because its founder is still at the helm,” Srinivasan said.

A legislative approach is unlikely to fare much better. Despite the growing populism on Capitol Hill, lawmakers generally avoid passing bills that target specific companies. And experts say the systematic approach pursued under Warren’s proposal—her bill would place tech companies with more than $25 billion in annual revenue under a stricter antitrust framework designed to provoke breakups—could lead to some creative accounting as Silicon Valley seeks to stay under the threshold. “It’s an arbitrary ceiling,” Lopatka said.

Warren seems to be aware her proposal faces a virtual gauntlet of roadblocks and a time frame that could stretch into a second term. Those facts, she argued, make it all the more imperative that her plan to bust up Facebook starts taking shape today.

“I think it needs to be done as soon as we can; there’s not any point of delaying,” Warren told National Journal. “Every day that goes by, they amass more power and they shut out more of their competition.”

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