Chris Hughes May Have Helped Found Facebook, But He’s Wrong on Antitrust

Former Facebook employee Chris Hughes recently published an oped complaining about his former employer, It’s Time to Break Up Facebook. While passionate, this oped is riddled with half-truths, unsupported statements and flatly wrong assertions.

This article attempts to manipulate the reader — starting with a parade of horribles about Facebook in order to make readers more susceptible to suggestion. The author, Chris Hughes, then closes with “recommended solutions” that not only threaten our national security, but undermine America’s founding principles.

But Hughes’s oped engages in circular logic and self-contradiction. For example, he starts the oped saying, “We already have the tools we need” but then closes with, “we need a new [governmental] agency.”

While Hughes took 6,000 words to lay out his complaints, we’re going to make it easy to see all the myths on which the horrible propositions lay.

Let’s start with one his “solutions” to save America:

Hughes: “We need a new agency, empowered by Congress to regulate tech companies…the agency should create guidelines for acceptable speech on social media.”

Here, Hughes wrongly suggests government should regulate speech.

Not only is this unconstitutional but also dangerous to our liberty. While online platforms work to improve the quality of content on their platforms, we should rely on consumers, not politically motivated politicians, to provide feedback on these efforts.

Hughes attempts to justify his bad idea bysaying this type of government censorship already exists for things like shouting “fire” in a crowded theatre. But this argument doesn’t hold water.

There are very narrow limits on the first amendment — mainly focused on calls to violence and slander. Hughes is wrong to point to the “fire in a crowded theater” analogy.

Firstly, the precedent was overruled 50 years after it was set in Schenck v. United States (1919).

Secondly, it is one thing to curtail free speech because of “clear and present danger.” It is another thing to give government the power to decide what speech is “acceptable on social media.”

Hughes: [There has been] a decline in entrepreneurship, stalled productivity growth, and higher prices and fewer choices for consumers.

Hughes is just factually wrong on all 3 counts.

Hughes is just factually wrong on all 3 counts.

First, the Kauffman Index of Growth Entrepreneurship shows that entrepreneurship is at its highest levels since 2008.

Second, consumer choice has never been greater. As opposed to when we had only Facebook and Myspace, we now also have Snapchat, Twitter, Twitch, Reddit, Pinterest, Tumblr, Medium, Tik Tok, and many more.

Third, America’s productivity rates have never been higher.

Hughes: The government must hold Mark [Zuckerberg] accountable.

Why? Facebook’s consumers already hold Zuckerberg accountable.

Facebook is held to account every time a user deletes their account. Involving government is more likely to distract Facebook from serving consumers rather than help them do so.

Hughes: A century later, in response to the rise of the oil, railroad and banking trusts of the Gilded Age, the Ohio Republican John Sherman said on the floor of Congress: “If we will not endure a king as a political power, we should not endure a king over the production…we should not submit to an autocrat of trade with power to prevent competition and to fix the price of any commodity.”

First, Hughes fails to explain what market Facebook dominates. If we are to define the market as “social networks” then we must also recognize the presence of YouTube, Twitter, Reddit, Pinterest, Twitch, and LinkedIn. While Facebook is certainly large in this market, you can’t reasonably see Facebook “dominating” the market.

While Facebook is certainly large in this market, you can’t reasonably see Facebook “dominating” the market.

Second, Hughes ignores that this statement would require Facebook to have the power to prevent both competition and fix prices.

Since Facebook is free if can’t “fix prices” for users. And Facebook can’t “fix prices” on ads as they face robust competition from Google and Amazon.

Third, if Facebook had the power to prevent competition, then why is Twitter still a major social media platform? Why is Snapchat? Why is Facebook not the market leader in digital advertising? One cannot persuasively assert that Facebook has unchecked and dangerous market power without answering these questions.

Hughes: Facebook so dominates social networking, it faces no market-based accountability. After all, where would they go?

Facebook, like all other publicly traded companies, is held to account by its shareholders. As users have used competing platforms like Twitter and Snapchat, Facebook was pushed to innovate. If Facebook enjoyed no threat from competition in social media, why is it constantly innovating?

There are plenty of alternatives to Facebook. While many people use Facebook and Instagram, millions also use YouTube, Twitter, Reddit, Pinterest, Twitch, LinkedIn, and many other platforms.

Hughes: The day after the company predicted in an earnings call that it would need to pay up to $5 billion as a penalty for its negligence — a slap on the wrist — Facebook’s shares surged 7 percent, adding $30 billion to its value, six times the size of the fine.

Here Hughes forces the reader to prove a negative by suggesting that the 7 percent surge in stock price was because the $5 billion was so low.

In reality, the increase in shares were because of Facebook’s successful Q1 earning report. The mentioned $5 billion set aside for a potential settlement with the FTC was part of the earnings report.

But the report exceeded market expectations on daily revenue, monthly-active users, and average revenue per user. So a surge following this amazing Q1 report is to be expected.

While Hughes was there during Facebook’s infancy, that doesn’t make him qualified to talk about antitrust enforcement, economics, threats to national security, or constitutional issues.

What Huges ignores is that Facebook’s market surge might have been even higher but for the FTC settlement set-aside.

Moreover, there is no evidence that Facebook engaged in negligent behavior. Let’s remember that Cambridge Analytica occurred because a professor at Cambridge University told Facebook he was conducting a study.

The Cambridge University professor then provided Facebook with signed documents promising to protect the privacy of the information collected from consenting Facebook users.

The only failure here of Facebook was trusting the signed contracts of a Cambridge University professor.

While Hughes was there during Facebook’s infancy, that doesn’t make him qualified to talk about antitrust enforcement, economics, threats to national security, or constitutional issues.