News Release

The Antitrust Case Against Facebook

Facebook recently announced that Jennifer Newstead would “join the company as General Counsel, overseeing the company’s global legal functions.” Newstead had been a legal adviser for the State Department. During her time in the Bush administration, Newstead was known for being the “day-to-day manager of the Patriot Act in Congress,” according to torture memo author John Yoo.

DINA SRINIVASAN, dina.srinivasan at aya.yale.edu, @DinaSrinivasan
Former ad tech entrepreneur and advertising executive Srinivasan is author of a recent study in the Berkeley Business Law Journal: “The Antitrust Case Against Facebook: A Monopolist’s Journey Towards Pervasive Surveillance in Spite of Consumers’ Preference for Privacy.”

She said today: “Clearly, Facebook is preparing for battle and hiring a government insider to lead it.

“But let’s remember that in the early 1900s, AT&T was also proficient at playing inside baseball. AT&T settled an early antitrust investigation with the Department of Justice but it was a settlement that pulled the wool over regulators’ eyes. It allowed AT&T to continue consolidating and monopolizing the market, at the expense of the American public. It would take another 60 or so years for our government to intervene and eventually break-up the AT&T monopoly.”

See Srinivasan’s recent interview with Lynn Parramore for the Institute for New Economic Thinking: “Facebook is what’s called a closed communication network, very similar to what AT&T was. There was a point in history when American consumers who had an AT&T phone could only make calls to and receive calls from other AT&T customers.

“We see something similar in social networking: You have to have the Facebook app, the Instagram app, and the Twitter app on your phone because none of the messaging platforms want to communicate with each other. Old time telecommunications was like that. An office would have multiple phones on a desk — one for each telecommunications network. Eventually this creates a dynamic in which the market tends to consolidate towards the one company that has the greatest base of customers.

“For social networking, you want to be where all of your friends and family are so that you can communicate with the most people. So the market starts to tip in Facebook’s favor, yet Facebook continues to perpetuate one particular promise of not tracking users as they move around the web. But after competitors folded and left the market, Facebook reneges on the most important privacy promise: not to track users across the web.”