October 1, 2019 / 9:00 PM / 16 days ago

Breakingviews - Zuckerberg grasps big problem with tech breakups

Facebook CEO Mark Zuckerberg testifies before a joint Senate Judiciary and Commerce Committees hearing regarding the company’s use and protection of user data, on Capitol Hill in Washington, U.S., April 10, 2018. REUTERS/Aaron Bernstein

NEW YORK (Reuters Breakingviews) - Mark Zuckerberg has grasped Facebook’s big problem – and its best defense. Zuckerberg acknowledged in a recording leaked on Tuesday that the U.S. government would probably try and bust up his $500 billion social network if Democratic candidate Elizabeth Warren wins the presidency next year. His argument: Making tech firms smaller would be counterproductive for preventing election interference. He’s right on both counts.

The Harvard dropout said he would “go to the mat” to protect the empire that counts Instagram and WhatsApp among its holdings, in a transcript of internal meetings published on the Verge. The combative approach is very different from the contrite image the Facebook boss presented when grilled by Congress earlier this year. While it would “suck” to hash it out in a legal battle, he believes he would emerge victorious. That’s only likely to inflame detractors.

Where Zuckerberg does Facebook more favors is in arguing that a breakup would be counter to the national interest. A bigger company would be better able to combat bad actors trying to sway political outcomes. Twitter faces the same foes but, being less than one-twentieth Facebook’s size in revenue terms, wields a smaller arsenal. It’s analogous to the situation banks face when it comes to cybersecurity. Scale makes them a target, but helps them bear the costs of building sturdy defenses.

Facebook’s detractors will need to decide what they want. Dissecting tech firms would reduce their hold on personal data, but if the goal is make them monitor what’s published on their networks more effectively, a different fix is required. Currently, internet companies are protected from liability for what users post, with the exception of a few carve outs, such as sex trafficking. Rolling back those protections would force tech behemoths to sift the sludge – and eat further into Facebook’s roughly 40% operating margin. Zuckerberg might have two battles on his hands.

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