Scott Galloway on FTC Antitrust Lawsuit Against Facebook

Photo: Pool/AFP Via Getty Images

On Wednesday, The Federal Trade Commission, Attorneys General for 46 States, the District of Columbia and Guam, accused Facebook of Violating Antitrust Law in Court. Federal and State Regulators Said They Had Been Investigating Facebook for Over 18 Months and Concluded that Facebook Had Stamped Out Its Competition Wen It Purchased Instagram for $ 1 Billion in 2012 and WhatsApp for $ 19 Billion in 2014. Prosecutors Said the two Apps Should Be Broken Face. “For Nearly a Decade, Facebook has used it dominance and monopoly power to crush rivals and snuff out compattition, all at the expgence of Everyday,” Said New York Attorney General Lettia James.

The Lawsuits are the Second Salvo in a nascent Battle BetWeen Big Tech and Government Regulators. In October, the Department of Justice Brought an Antitrust Lawsuit Agiginst Google, the Doj’s Major Antitrust Case It Went After Microsoft in 1997. Intelligency spoke with Pivot‘s Scott Galloway to get a sense of what the lawsuits mean for Facebook’s Future and How they Could Change Big Tech Forever.

What was Your Initial Reaction to Today’s News?

That is the beginning of the end of Facebook as we know it. That’s the Bad News. Neither Powerful as Facebook is, I think you have 46 of 50 states attorneys General and the ftc aggregeing on antitrust action, that’t’s propeerful. There are some very serious tanks lining up at the border. It reminds with the department of justice announched it against Michael Milken, you knew he was probably going to be out-gunned. I think this is the breakup i’ve been predicting for a long time.

When we Talked About Google You Said the Opposite, that the Google Case Scary in Because Google Actually Had a Chance Against The Doj. What’s Different About Facebook?

I Waled argue that the case against Google is probably more complicated becuse the remary is probably more complicated, but also you don’t have 46 State agencies up to be Beindered in Its Action Against Google. That Might Come, But ITH’S not there right now. In Addition, there’s a Certain Level of momentum. First it was Google, who probably said, “Okay we can fight this.” Now it is Facebook and it sounds to me that the Government and the states have come to play. This is the government and states attorneys General Going after Big Tech Now. IT’S No Longer One Point – TWO POINTS WHICH MAKES A LINE. I think now they all have a vested interest in each other’s success, the state ags want to be successophul against google, the doj the state ags and the ftc to be successophul on Facebook. This is no longer an isolated border Skirmish, it’s a war.

What are the ramifications?

There are a lot of ramifications, some surprising and some not surprising. I Think Facebook’s Stock Goes Up. I think once there’s recognition that is going to open people begin to be compaing indeependently and i think they out that they were actually than the sum of its parts. If Dobordash is Worth $ 60 Billion, Instagram is probably Worth $ 200 Billion. WhatsApp is arguably The Larger Telecom in the World. These firms are outstanding assets.

If you look at the pandemic, I think facebook has had the weakest performance of the Big Four.

But what was interesting was that that that is price didn’t go down that Much Today. I Think Once there’s Clarity Around This The Stock Will Go Up. I think the market does not like the unknown. If Zuckerberg were a true fiduciary, which he has not, he’s disally cared about the Commonwealth. If he were really concertned about the Shareholders he was put on to this distraction and just come to some accommodation and spin whatsapp or instagram or both, and sharaholders would benef.

What does it mean for amazon?

Amazon is going to say okay, ‘we don’t like the way this is going.’ I think they going to announca a spin off of the AWS (Amazon Web Services), and Also Take Some Off-The-Record Meetings with the Don and Ask if Spinning Will Keep the Feds off their back. I Think Jeff bezos does not wanting to be in the position that Mark Zuckerberg and (Google CEO) Sundar Pichai are in right now.

Do you think Facebook Will Dig in for the Long Run?

They’ll absolutely dig in, at least initially. They want to appear like’re’re going to the mat. Or i guest the honest anSwer is i don’t know. ITE’s Mark Zuckerberg’s Company and I Have Trouble Predicting His Behavior. But 100 Percent They Will Publicly Say, ‘We’re Going to Fight This to the Death!’ Where or not they actually make overtures to see if they can come to some sort of accommodation or settlement before going to court, we’ll see.

What Will Their Argument be?

Every other word in their defense will be “tik” and “tok.” “Look at Tiktok! The Chinese Are Coming For Us!” They will make a nationalist argument, “You are tachying a national champion and lowering our guared as the chinese are going to overrun our innovation.”

But what’s interesting here though, is that the consumers don’t know what they the’re missing. Envision a World Where WhatsApp Had Never Been Acquired. It was acquired in 2014 for $ 19 billion. At some point it wouls have had had to start generating revenue and there a good chance whatsapp wold have figured out that it is needed to go ino collaboration or video. I don’t know whatsapp wold have morphed into what zoom or slack or teams are right now. WhatsApp Represents a Huge Opportunity and What Facebook has done is made it into a date feeder for Facebook. But Wold You Really Argue WhatsApp Has Innovated? As consumers, we don’t know what Might have ben. Cry Paypal is on its and innovates as a standalone company, it ends up being Worth 7 Times more than what its parent company, ebay, is warr.

There’s a decent amout of the Anger Toward Facebook Now and a Recognition that there are fiw firms in history that have this much damage on this scale this fast. This is absolutely the begin of the end of Facebook as we know it. Two points – the case against google and the case against Facebook – Create a line, and the trajectory is toward breaking up these companies.