Nick Clegg on breaking up Facebook

The first misunderstanding is about Facebook itself and the competitive dynamics in which we operate. We are a large company made up of many smaller pieces. All of our products and services fight for customers. Each one has at least three or four competitors with hundreds of millions, if not billions, of users. In photo and video-sharing, we compete against services like YouTube, Snapchat, Twitter, Pinterest and TikTok, an emerging competitor.

In messaging, we’re not even the leader in the top three markets — China, Japan and, by our estimate, the United States — where we compete with Apple’s iMessage, WeChat, Line and Microsoft’s Skype. Globally, the context in which social media must be understood, China alone has several large social media companies, including powerhouses like Tencent and Sina. It will seem perverse to people in Europe, and certainly in China, to see American policymakers talking about dismantling one of America’s biggest global players.

In this competitive environment, it is hard to sustain the claim that Facebook is a monopoly. Almost all of our revenue comes from digital advertising, and most estimates say Facebook’s share is about 20 percent of the United States online ad market, which means 80 percent of all digital ads happen off our platforms.

That is in the NYT, to be clear Clegg now works for Facebook.

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Of course, “Breaking Up Facebook Is Not the Answer”. Getting us a better alternative is a better way.
https://perkurowski.blogspot.com/2019/05/i-have-some-ideas-about-what-could.html

Per your blog, #3 is similar to how I've always felt about FB. Either they cut me into their revenue stream or I don't use FB. #4,5 has already happened (Cambridge Analytica, PRISM, foreign govs, etc.) and is giving regulators more reason to break them up.

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No comment on the broader issues, but I found this misleading:

> Facebook’s share is about 20 percent of the United States online ad market

This may be true for the online ad market overall, but in terms of social spend, Facebook has ~80% market share. Marketers typically allocate budgets by category such as search or social and then pick platforms within those categories (though, to be fair, budgets do respond somewhat to relative changes in cost structure between spend categoties).

Still, with Facebook's (and especially its subsidiary Instagram's) dominance in the social market, it's hard to say it has any real competitors right now. Competition has led it to innovate in order to maintain competitive as formats, but it's inventory is unmatched and unmatchable. Even if a competitor provided substantially better ads, it would be difficult for it to provide the demanded inventory when new users are limited due to network effects.

It's hard to argue FB has much potential for sustained competition, given its dominant share of the social market (the world of which is expanding all the time) and ability to quickly copy or simply buy-out promising brands and technologies.

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"terms of social spend, Facebook has ~80% market"

My answer: So what. Define the terms so that FB has the overwhelming lead a d they will.

Its irritating that all these righteous progs were worshipping FB only a few years ago, heedless of it dominance and obvious privacy issues, which is one reason it became so dominant in the first place. Now in their pique at their own foolishness, they want to destroy it.

Name one progressive who was ever "worshipping" Facebook. Actually, name any person of any political persuasion who has worshipped Facebook. Pundits and writers have been complaining about it since its inception, from how it hurts our social lives to its privacy issues.

Barack Obama. David Plouffe.

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Just getting Facebook to act in way to avoid calls for 'breaking it up' seems hard enough, particularly when Facebook has said that separate parts would remain separate - 'In March 2018 — before GDPR came into effect — a plan to share data between WhatsApp and Facebook was ruled as illegal by the U.K. Information Commissioner's Office (ICO).

At the time, the ICO said it had investigated whether WhatsApp could legally share user data with Facebook, finding that "such sharing would involve the processing of personal data for a purpose that is incompatible with the purpose for which such data was obtained."

The European Commission also fined the tech giant 110 million euros ($122 million) in 2017 for giving "misleading information" about its acquisition of WhatsApp. Facebook bought Instagram in 2012 and WhatsApp in 2014.' https://www.cnbc.com/2019/01/29/facebooks-plan-to-merge-messaging-services-could-be-barred-in-the-eu.html

Or as noted The Register - 'Facebook has been warned it can only borg its three messaging platforms in the European Union if it meets data protection rules. There are widespread concerns about the plan's impact.

The Irish Data Protection Commission has called on Facebook to provide it with an "urgent briefing" on the proposals.

In a statement, the Irish watchdog (Facebook's European HQ is in Dublin) said it understood the plan was at a "very early conceptual stage" but that it would keep close tabs on the process.

"The Irish DPC will be very closely scrutinising Facebook's plans as they develop, particularly insofar as they involve the sharing and merging of personal data between different Facebook companies," it said.

At the moment, WhatsApp and Instagram users are identified by their phone numbers, while Facebookers sign up with other information. Bringing the three platforms together would give the Zuckerborg the ability to greatly expand its already detailed profiles of users, creating an even more lucrative data set to mine for ad revenue.' https://www.theregister.co.uk/2019/01/29/irish_dpc_summons_facebook_merger/

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Octopus, while knife-fighting eight different men: "I need ALL these arms! How else can I fight all the fights I start?"

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Nick Clegg... "Tuition fee increases will not happen". (They happen shortly afyer) "An EU army is a 'dangerous fantasy'." (Key legislation enabling it gets signed a few months later). "Facebook monopoly is never going to happen". (Watch this space?)

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Clegg: "All of our products and services fight for customers." Sleight of hand. Advertisers are the customers, users are the product.

This is not entirely true. Just like TV, where the ones paying are the advertisers, they have to think about what users are actually going to like.

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Here is the argument for breaking up Facebook, which is much more compelling than Clegg's self-interested response.

https://www.nytimes.com/2019/05/09/opinion/sunday/chris-hughes-facebook-zuckerberg.html

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Calls to break up big tech aren't about big tech.

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If you think FB isn’t a monopoly, try quitting it, as I have. Friends, schools, community groups all have FB pages that they use as their main ways to communicate. Quit the app and you lose that.

You can remain e member of FB without posting your own information. just use it to access the info you need.

And then they still monetize you just as well. Most of the value, advertisement wise, does not come from what you post (although some comes from what you hit like on), but by what you read and watch. Facebook still has a pretty good profile of you, and make money off it. Heck, they still build shadow profiles of people who have never had a Facebook account

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Yes, network effects are real. Not an argument for breaking up.

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Everyone under 30 has already quit FB.

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The thing I feel most when people talk about breaking up Facebook is .. I don't care.

Why should I?

I suppose I could be hyper-political on this and think Facebook is the line in the sand that makes or breaks big business, or monopoly, or whatever.

But who cares. The apps would be largely the same. Users would do the same things. Privacy would be about the same. I'd give breakup the edge on inspiring innovation, but just an edge.

Note that this means breakup of Facebook is no great danger, either.

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we have seen twice in the last two years a major giant miss on their earnings class, FB and now Google. Fundamentally, we know it is a macro issue, as each as so much cash, yet CTR tends to be the larger signifier. Internally, this would happen less if they are broken into pieces. As far as the app economy, I don't care.

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"We are a large company made up of many smaller pieces. All of our products and services fight for customers."
This is the lie they told to regulators when acquiring WhatsApp. The EU only fined them $122M for the lie, so I guess they figure they can keep repeating it.

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Check out Peter Thiel's lecture from Y Combinator's 'How to Start a Startup' series.

In a nutshell, in making their case, the small business, desperate to convince the world it's a monopoly, goes smaller still: 'We're the only high-end, organic Korean restaurant in our locality that does home delivery'.

The actual monopoly company, equally desperate not to be seen as such, goes bigger: 'We're in competition with anything else any of our users might choose to do instead of spending the next ten minutes on Facebook'.

+1 - it's like the guy heard Peter Thiel's talk about monopolies and thought 'ah yes - that's what I'll say'!

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+1

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"In messaging, we’re not even the leader in the top three markets — China, Japan and, by our estimate, the United States — where we compete with Apple’s iMessage, WeChat, Line and Microsoft’s Skype. Globally, the context in which social media must be understood, China alone has several large social media companies, including powerhouses like Tencent and Sina. It will seem perverse to people in Europe, and certainly in China, to see American policymakers talking about dismantling one of America’s biggest global players."

I'm trying to picture what America would look like 'crippled' by not having a "biggest global player" in the world of social media. I mean if the US shares cat pictures and gets birthday reminders from a host of smaller app companies is that really some type of strategic national security disadvantage for the US compared to China? This seems like some type of fusion of the infant industries/strategic industries argument for protectionism.

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