Breaking Up Facebook Isn’t Enough
The Facebook co-founder Chris Hughes calls the company’s influence staggering and dangerous. But his solutions are incomplete and unsatisfying.
In an explosive opinion piece published today in The New York Times, Chris Hughes, a Facebook co-founder and Mark Zuckerberg’s former Harvard roommate, called for the government to break up the social-media company. “I haven’t worked at the company in a decade,” Hughes wrote, “But I feel a sense of anger and responsibility.”
That’s a nice gesture, and Hughes, now a co-founder of a basic-income collective, puts forth some worthy ideas that tech entrepreneurs, even lapsed ones, rarely embrace. But the gesture is still more rhetorical than actionable, and it doesn’t go nearly far enough into specifics about how to dismantle a company he calls a dangerous monopoly.
It probably makes sense to break up Facebook. Splitting off two of its subsidiaries, Instagram and WhatsApp, would be a reasonable first step toward that end, and Hughes’s rationale for doing so also makes sense. Billions of people now use these services, and Facebook has made motions that it intends to integrate them into its other products. (That process has already been under way for some time, for example by surfacing Facebook updates in Instagram.)
But even if you did that, you’d be left with core Facebook. According to the Pew Research Center, about 68 percent of U.S. adults use Facebook, far more than the number who use Instagram or WhatsApp. Among these Facebook users, about three-quarters of them visit the site daily. The service is popular among every demographic, but especially among women, urbanites, and the college educated. Usage among older people has also been increasing steadily. Teens use Facebook a lot less than they used to—Instagram and Snapchat are more popular for young people—but they’ve hardly given up Facebook in the way some media coverage of those competitors might suggest. As of last year, according to Pew, a little more than half of kids ages 13 to 17 reported using the service.
These are the data that advocates would use to justify Facebook as a “natural monopoly,” like the water or electric grids. Hughes dismisses that claim, but offers no alternative perspective. Overall, he has little to say about how a hypothetical breakup of the company would impact the core Facebook product at all. Would you divest core Facebook into national shards and expatriate them, perhaps imposing some kind of punitive excise tax in the process? Would you break core Facebook up into sub-products, like Messenger, ads, News Feed, and so on? Given the fluidity of software, it’s hard to identify discrete products or services within Facebook’s offering, and Facebook itself changes them all the time—just recently, the company announced plans to redesign its app based on events and groups, and to de-prioritize the News Feed.
The company has never looked like a railroad or a telco, or even a technology company from a former era, like Microsoft, with its Windows, Office, Cloud, and other distinct products and associated divisions. Part of the problem with breaking up Facebook is that the company is amoebic, of little determinate form, like the networks of mucous mesh grazers that trawl the deep seas.
The appeal of Hughes as a critic of Facebook derives from his status as a co-founder, an early member of the product team, and a friend of Mark Zuckerberg. And yet, he failed to concretize that unique experience into a unique perspective. It’s not like Hughes is the only party to suggest breaking up Facebook, or to cite Instagram and WhatsApp as the obvious limbs to sever first. Given how dire his warnings are about Facebook’s power, the idea that a tripartite version of the company would offer satisfactory reprieve rings hollow.
Facebook’s power brings up one clear problem: Zuckerberg’s tight grip on the board of directors, and therefore on the company’s strategy and actions. But Hughes gives only momentary attention to the company’s governance structure, noting that the CEO controls about 60 percent of its voting shares.
Hughes makes no call to end Facebook’s ownership structure, which is the cause of that imbalance of power. Facebook has two classes of stock. One of the purposes of stock ownership is to give investors a say in the way a company is governed. That’s done through the board and through proxy votes by individual and institutional investors. In Facebook’s case, Class A shares are issued to the latter; they are worth one vote per share. Class B shares are controlled by Zuckerberg and a small group of investors and insiders; they are worth 10 votes per share. Zuckerberg controls the majority of Class B shares.
This structure, known as dual-class stock, has become more common in recent years as a way to give founders and investors greater control of their companies, even after they go public. Proponents of the multi-class approach sometimes claim that the structure helps executives focus on long-term growth, but critics see it as a way to avoid oversight even after a company goes public. When Google went public in 2004 (with a two-class structure), co-founder Larry Page wrote in an investor’s letter that the express purpose of that structure was to “make it harder for outside parties to take over or influence Google.”
There was a time when public companies had a responsibility to the actual public—the citizens. They were chartered with the general interest in mind, not just the benefit of owners and shareholders. But after financialization made going public a matter of concern for speculators, even the financial markets themselves have begun to hold multi-class stock in suspicion. The social-media company Snap tried to orchestrate an IPO that would give its founders a massive majority control. Dropbox, BlueApron, and others did likewise. These and other examples caused some of the biggest global stock indexes, like S&P Dow Jones and FTSE Russell, to start making plans to exclude multi-class companies with limited investor input. Given that many institutional and individual investors buy into index funds like the S&P 500 automatically, such a change would limit the target companies’ reach on the public exchanges.
Despite the long-standing debate about dual-class share structures, especially in the tech sector, Hughes makes no call to end dual- or multi-class structures at Facebook or elsewhere. And yet, that change is probably the only way to inject oversight on behalf of both the investors and the general public. Large, institutional investors have been calling for Zuckerberg’s ouster for some time, and a restructured Facebook might make that change possible. If Hughes is right that Zuckerberg’s influence is “staggering, far beyond that of anyone else in the private sector or in government,” then he ought to make a strong case for ending that reign directly.
As a “scholarship kid” from North Carolina who left Facebook early and divested his interest in the company after the 2012 IPO—he was worth more than $400 million in 2016—Hughes’s down-home appeal is palpable all throughout the editorial. He comes across as earnest and humane, in contrast to Zuckerberg, whom he calls “a good, kind person” but implies is a devious, untrustworthy scoundrel, by the spirit of the piece.
The article is accompanied by remarkable images of Hughes and Zuckerberg over the years. The two as boys, really, at Harvard, with juvenile haircuts, ill-fitting prep clothes, and outmoded laptops, or as still impossibly young men soon after Facebook’s founding. “I take responsibility for not sounding the alarm earlier,” Hughes writes, acknowledging both his college-kid ignorance and his dumb luck in falling into Facebook in the first place.
But Hughes misses an opportunity to make a meaningful lesson of himself in the process. He says nothing to deter the next generations of computationalists—and there are absolute hordes of them now—from seeing Zuckerberg as an aspirational figure rather than a reprobate. Nor does he encourage the next generation of technologists to seek out a greater depth of knowledge and context for solving problems with computers, a pursuit that might have helped Hughes when he was working on News Feed and other features of the Facebook service.
In this regard, Hughes also badly misconstrues a critique he attributes to a former Facebook investor, Don Graham, who he writes “has accused those who criticize the company now as having as having ‘all the courage of the last man leaping on the pile at a football game.’” This criticism applies not just to Hughes but also to WhatsApp founder Brian Acton, who called for people to delete their Facebook accounts; the early Facebook investor Roger McNamee, who wrote a best-selling book about how terrible Facebook is; and koan artist Tristan Harris, who has been peddling the zen derived from a “time well spent” with technology after leaving Google.
Hughes objects to Graham’s barb, saying “anyone suggesting that Facebook is akin to a pinned football player misrepresents its resilience and power.” But that’s not what Graham was getting at. His censure holds that people who got lucky by accident, did little in the moment to rein in their bad power, and now feel bad about the outcomes are untrustworthy voices after the fact. “Mark Zuckerberg cannot fix Facebook, but our government can,” Hughes writes. But Facebook has also broken our government, and countless others around the world. A wealthy, influential detractor who is also a former insider is a welcome ally for those who wish for the end of the Facebook era. But alas, it is not enough.
In fact, that Hughes would be considered an important figure to deliver this critique is a symptom of the illness he himself diagnoses. His is a well-written and even a bold take, given the limited expectations the public has come to assume of tech magnates. But the star treatment the Times gave it — complete with custom video — wouldn’t have been afforded to all the other critics of Facebook and related companies, who have been beating this drum for years, if not decades.
Overall, Hughes’s opinion piece sets the same trap that technology does in general. If you find his censure satisfying and substantial, you are probably a Pollyanna, willing to imagine that tech can self-regulate, or if not, that it can be persuaded to do good for the public that it has mostly treated as raw material to be turned into profit. But if you do not, then you become an unsatisfiable antagonist, satisfied by nothing. Either you “like” my ideas in public, or you withdraw into the shadows of ignorance. Either you share (repost, retweet) someone’s content, or you bury it in the oblivion of deep scrolling.
This, as it happens, is the kind of false choice the age of social media has imbued upon everything, a caricature of debate, a lampoon of discourse—mistaking the fact of a thing for its virtue, and its affect for its effect.