Implications of a Facebook Breakup

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A Headline Debate

Earlier this month, the opinion section of The New York Times became a battleground in the debate over how to best handle growing monopolies within big tech. Specifically, Facebook was put in the crosshairs after co-founder Chris Hughes published an opinion calling for the breakup of the company he helped create. Two days later, The Times published a countering opinion from Facebook’s VP for global affairs and communications, Nick Clegg, who posits that a breakup of the company won’t fix what’s wrong with social media.

The question of whether Facebook is truly a monopoly is important in this debate. On the one hand, Facebook’s service is free to users and, despite its popularity, social networking is objectively not an essential service or commodity. On the other, the true costs of using Facebook, Instagram, and WhatsApp are in the data provided and the forfeiture of privacy, all while the platform continues to grow in its significance as a means of communicating and disseminating information. While privacy has been a sore spot for the company over the last year, with several breaches exposing private user data, Facebook’s cultural significance is why Hughes and others believe now is the time to break up Facebook.

The debate taking place across headlines represents a major milestone: this is the first time a social network has had to tackle the very real possibility of a breakup. Because of this, it’s important for marketers and advertisers to consider how things could change following the separation of Facebook, Instagram, and WhatsApp.

Who Owns the Ad Tech?

Unlike the breakup of a traditional monopoly, where physical assets are divided and areas of operation segmented to encourage competition, the breakup of a technology company would be far more complex.

In the case of Facebook and Instagram, the lines between who owns which features would be hard to draw. Since Instagram was acquired by Facebook in 2012, a number of essential platform elements have been rolled out that could lead to a legal battle over ownership. What would happen to the popular Discover feed? Or the new in-app checkout feature for retailers? Both components were introduced while under Facebook’s leadership, implying that the code behind them could be contested in a split.

The Division of Data

Not unlike the question of how to best allocate key pieces of advertising technology, the data powering Facebook, Instagram, and WhatsApp would also be difficult to cleanly break apart. Usernames and passwords would be relatively simple to delineate, but distinguishing and distributing data about users would be much more complex.

The Facebook Pixel, for instance, collects behavioral and purchase data for both Facebook and Instagram advertisers. Without access to this data, the Instagram platform would take a major step backward in its capabilities. If this were to happen, brands that have relied on the unique targeting and creative capabilities of Instagram would need to completely reevaluate their marketing strategies.

A Worrisome Precedent

Also important to consider is what breaking up Facebook could mean for other internet giants. Google (Alphabet), Amazon, Adobe, and other major players in the tech sector and digital advertising space could find themselves under the same scrutiny as Facebook. Although a fair assessment of business practices is essential, the vilification of digital advertising could come at the expense of  innovation.

Ultimately, Facebook is facing one of its greatest challenges as a company. Although it has managed to grow into the world’s most dominant social network, that dedication to growth and the subsequent rise in influence has drawn the ire of regulators who view the company as monopolistic. Regardless of what, if any, actions take place, Facebook is here to stay.

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