Let’s hold Facebook to the same standards as other players in the industry

In Facebook CEO Mark Zuckerberg’s Senate hearing earlier this week, a question by Sen. Roger Wicker (R-Miss.) on whether Facebook should play by the same rules as others in the internet value chain prompted Zuckerberg to present the “dorm room defense.” Zuckerberg claimed Facebook was and still is threatened by internet service providers (ISPs).

It’s a surprising and troubling suggestion that deserves to be unpacked.

{mosads}If Facebook were launched in 2018, it would be a purely mobile service. Facebook was launched as a desktop platform in 2004, requiring traditional ISP access to get online; but today, 95 percent of its users access it by a mobile device. Additionally, its most important apps and services were conceived first and only via mobile wireless technologies, including WhatsApp, Messenger and Instagram. Facebook’s platforms, its advertising engine and its suite of developer tools is predicated on a mobile internet experience.

Today, startups launching their apps in the U.S. have multiple choices for ISPs, including but not limited to four national mobile carriers, multiple regional carriers, fixed wireless providers, satellite broadband and wireline providers which offer WiFi and 4G connectivity. Even Facebook and Google offer forms of internet connectivity with drones and balloons. This is a far cry from the single ISP offered to Zuckerberg’s dorm room where he created the internet giant.

Today’s 4G networks offer more speed and connectivity than the typical wireline connection Zuckerberg used in 2004. Startups in 2004 and today have no problem getting unfettered internet access from a service provider, but competing against Facebook and other online giants would be another story.

Facebook and major internet companies were founded well before the “net neutrality” order in 2015. The largest American internet companies by scale and scope including Microsoft (1975), Apple (1976), Amazon (1994), Google (1997), Netflix (1997), Wikipedia (2001), Facebook (2004), and Twitter (2006) were all founded at least a decade before Title II net neutrality regulations took effect in 2015.

The situation Zuckerberg describes of not being able to access the internet or experiencing an unreasonable price for access is a form of anticompetitive behavior that is outlawed by the Federal Trade Commission Act of 1914. Then and now, the FTC polices such activity.

The fact that Facebook and the internet companies were able to get online and grow reflects not only the effectiveness of the FTC, but a 1996 bipartisan congressional agreement that the internet should be “unfettered by State or Federal regulation” to “promote competition and reduce regulation in order to secure lower prices and higher quality services for American telecommunications consumers and encourage the rapid deployment of new telecommunications technologies.”

What’s also interesting is that no new Facebook or Google-like company has emerged anywhere that has adopted net neutrality rules. From an analysis standpoint, this suggests that the larger firms could have used net neutrality to cement their dominance by preventing competitors from entering the market, rather than fostering a thriving and innovative internet ecosystem.

Zuckerberg claimed on Capitol Hill that regulation must be harder on the “pipes” of the internet — i.e., broadband providers — rather than the software apps and platforms “on top” of the pipes, i.e., Facebook. The pipe vs. platform distinction is not scientifically correct, as today’s information communication technologies have long been converged entities with many elements of both the so-called pipe and platform. 

It’s worth noting that even though the most dominant players in the tech space today are Facebook and Google, this artificial distinction between providers and platforms is often exploited for political reasons and perpetuated by Silicon Valley lobbyists and regulatory advocates who want to use regulation to get favorable price controls for big companies’ internet access, confining the benefits of two-sided market models to their own services, while denying them to broadband customers. While Facebook enjoys the business model of free or advertising-supported, it uses regulation to deny that benefit to ISPs’ customers, many of whom would like to pay less for broadband.

Zuckerberg’s attempt to justify sector-specific overregulation during his Capitol Hill appearances this week is deeply flawed and concerning. The fact remains that Facebook itself has apparently violated some of the core principles of net neutrality by routinely blocking content from entities with whose views it does not agree. This week’s spectacle of back-to-back hearings in the U.S. House and Senate confirm that Facebook doesn’t need protections from ISPs — but its users need protection from Facebook.

Facebook and other Silicon Valley giants seemingly have used discriminatory regulation to win advantages, protect themselves from competition and cement their dominance. It’s time for this regulatory distortion to be corrected.

Dr. Roslyn Layton is a visiting scholar at the American Enterprise Institute where she focuses on evidence-based policy for information, communications and digital technology industries, and a visiting researcher at Denmark’s Aalborg University.