You Can’t Boycott a Monopoly

The #StopProfitForHate is a noble campaign, but Facebook won’t permanently change unless we break its monopoly.
July 9, 2020, 12:21pm
Facebook's top executives, CEO Mark Zuckerberg and chief operating officer Sheryl Sandberg, had a meeting on Tuesday with a coalition of civil rights groups that have organized a major advertising boycott of the company over its handling of hate speech.
JOSH EDELSON / Contributor

Facebook's top executives, CEO Mark Zuckerberg and chief operating officer Sheryl Sandberg, had a meeting on Tuesday with a coalition of civil rights groups that have organized a major advertising boycott of the company over its handling of hate speech.

On a media call afterwards, representatives from the N.A.A.C.P., Anti-Defamation League, Color of Change, and Free Press made it clear that the meeting had gone horribly.

Jessica Gonazalez, co-CEO of Free Press, summed up the company's efforts as "the same old talking points to try and placate us without meeting our demands." Rashad Robinson, President of Color of Change, said that the executives “showed up to the meeting expecting an A for attendance. Attending alone is not enough.”

The groups presented 10 specific demands they referred to as "low-hanging fruit.” The hope was that these demands would begin the process of radically fighting hate speech on the platform, but so far Facebook has only partially addressed the first demand. The coalition calls for hiring a C-suite executive with civil rights expertise to "evaluate products and policies for discrimination, bias, and hate.” While Facebook agreed to hire such a person, the representatives told journalists Facebook would not commit to a C-suite position or provide any concrete details about the position in their meeting.

Representatives went on to call the meeting “disappointing,” a “PR exercise,” and yet another opportunity for “spin” from the company. Jonathan Greenblatt, CEO of the Anti-Defamation League, told journalists that it was "abundantly clear" that Facebook "is not yet ready to address the vitriolic hate on their platform."

The reason for this is obvious: the gargantuan Facebook and Google have an effective duopoly on digital advertising for all of America, not just big spenders. Facebook is so big that it is not even the slightest bit afraid of other unfathomably large companies (e.g. Verizon, Microsoft, or Starbucks) pulling money from its platform.

Early this month, The Information reported that Zuckerberg privately characterized the boycott at a staff meeting as a "reputational and a partner issue," not an economic one, and as a result "these advertisers will be back on the platform soon enough." For the Facebook chief executive, there's no reason to "change our policies or approach on anything because of a threat to a small percentage of our revenue, or to any percentage of our revenue."

Last year, Facebook brought in nearly $70 billion in advertising revenue—only 6 percent, a meager $4.2 billion of it, came from the 100 top ad spenders. The remaining $65.3 billion came from small and medium-sized businesses. And while the pandemic and boycott have hurt the company to an extent (Facebook cut its spending this fiscal year by $3 billion to make up for the pandemic's effects on advertising and lost $60 billion in stock value on June 26, the day the ad boycott really took off) analysts seem unfazed and the company has another $60 billion cash on hand. Its stock has also gained nearly $80 billion in value since the day the boycott launched, making up for any initial losses.

"It's important for groups and advertisers to apply public pressure. But we shouldn't think that public pressure is going to be enough. The government is going to need to act,” said Charlotte Slaiman, competition policy director at Public Knowledge, a non-profit focused on platforms and the digital economy. "The impact of our public pressure would be more powerful if we have a competitive marketplace."

Slaiman is not advocating for free market economics to unleash the engine of the marketplace of ideas, or whatever. Instead, she’s interested in significant antitrust reforms to fight Facebook’s monopoly that gives it the ability to act unilaterally because there are no economic threats, only “reputational” and “partner” issues as Zuckerberg so aptly put it.

As important as the #StopProfitFromHate campaign is right now, the meeting between Facebook and civil rights groups showcased that Facebook can choose to meet demands or ignore them, even when billions are at stake. You can’t boycott a monopoly. And even if Facebook were to meet demands, there’s no guarantee of future collaboration if the company’s power eclipses any damage competitors or the public can do.

Facebook’s power goes far beyond deflecting a boycott. Its position has given it leeway to smear critics (including Color of Change, which attended the meeting an helped organize the boycott), attempt to implement a new global currency, incite genocide, and shrug off regulatory fines in the billions.

There is no chance that Facebook, which also owns social media juggernatus Instagram and WhatsApp, will reduce its power voluntarily. During Congressional hearings in 2018, Zuckerberg spent an enormous amount of time arguing that Facebook is not a monopoly. And yet his internal suggestion that a mass boycott from some of the most powerful companies in the world will have little or no effect on the company indicates that Facebook is able to operate like one. These companies have no choice, Zuckerberg said, but to come back.

As Public Knowledge laid out in a letter to the FTC, Facebook "benefits form significant barriers to entry, [including] very strong network effects... [which] make it hard for a new social network to gain users.” Indeed, over the years numerous “Facebook killers” have come and gone without making much of a dent.

Slaiman pointed to the United Kingdom, which conducted an economic analysis of digital advertising markets to help plan what shape antitrust action would and what its goals should be. The report’s conclusion was that if we are interested in making Facebook accountable, transparent, and reducing its negative impact on individuals and society at large, then short of breaking up the platform or spinning off its various products into standalone public goods and services, we need regulatory frameworks that make the company more vulnerable to government action and public pressure.

This article originally appeared on VICE US.