What a forced Facebook split could mean for marketers
- 26 May 2021
Big tech is at (yet another) tipping point. The UK government’s new Digital Markets Unit will look at codes of conduct between the likes of Facebook and advertisers and some say the tech giants could be split up in the next five years, finds Lucy Handley.
The UK’s move is the latest in a long line of government moves to scrutinise Facebook, Google, Amazon and more. In the US, Facebook is attempting to get an antitrust lawsuit brought by the Federal Trade Commission thrown out and in Europe the company’s challenge over a German antitrust suit is heading to the European Court of Justice. Google is also subject to an EU investigation into whether its plan to replace third-party cookies is anti-competitive.
The central theme is that regulators are concerned that the tech giants have an unfair monopoly. The FTC’s lawsuit alleges that Facebook has been anti-competitive by acquiring smaller companies – such as Instagram and WhatsApp, a move Facebook said is ‘revisionist history’ in a December blog post, because the FTC approved those acquisitions several years ago.
But separating out Facebook for example would be extraordinarily complex, in part because of questions over how the technology that serves advertising would be broken down, as well as concerns over consumer data ownership. If the main Facebook app became a separate company, how would ads appear on someone’s Instagram feed if the app no longer had access to that user’s data?
Some commentators say such companies will be forced to split sooner than you might think. Bruce Daisley, a former Twitter and Google executive, thinks Facebook will be broken up into its constituent parts and Google’s parent company Alphabet will have to sell off YouTube within the next five years. And he has argued that dividing up such firms could be good for consumers. “Big firms generally are slow and don’t innovate and so it’s better for everyone if you’ve got people experimenting and doing new things,” he told Steven Bartlett’s The Diary of a CEO podcast earlier this year.
Facebook argues that it has many competitors, and its vice president for global affairs and communication Nick Clegg said that it has spent time and vast amounts of money developing software to tackle hate speech – which a smaller company may not be able to do. But for Daisley, that technology could be a marketable product. “That sounds like something that shouldn’t be the point of difference…rather that should be something that some entrepreneur unveils to other firms,” he said.
Dr Martin Moore, director of the Centre for the Study of Media, Communication and Power at Kings College London, told me that content regulation could be a reason for the large platforms to argue against being split up – and therefore there is a possibility that safety technology becomes propriety to platforms. “There is a genuine risk that as you impose increasing obligations, these companies do become some of the only companies that have the ability to put all the safety mechanisms in place, because they have such power and such money and such scale. So, in a way, you kind of cement and consolidate their position.”
A fine balance
Some firms may try to get ahead of regulators by splitting up before they’re made to, he added. “There's a good chance that you'll get other companies thinking well look, you know, let's jump before we're pushed - so Amazon perhaps hiving off Amazon Web Services … over the next year to 18 months [tech platforms] will be taking their own action.”
While a possible splitting up of big tech firms might make them worth more individually than the sum of their parts (see eBay’s separation from PayPal), there could be other issues such as the potential loss of talented staff who may leap off a sinking ship.
And while the Digital Markets Unit says it will scrutinise the relationship between big tech and advertisers, it may be tricky to manage, Moore said. “It depends again on its brief and its powers, especially given the UK will want to be a very attractive country for these types of firms, since Brexit. So, whether or not there's a political will to do something and whether or not they can figure out exactly how to deal with digital advertising, given how far down the line we already are, is unclear.”
Digital marketers have a rollercoaster ride ahead.
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