Nicholas Thompson interviewed Tim Wu:

Nicholas Thompson: What I’m going to do here is present the arguments that Mark Zuckerberg gave on antitrust yester­day in the fairest way I can, and then, Tim, I want you to respond. So it’ll be a bit like Tim being on stage yesterday.

Mark made two arguments, and the company often makes a third. Number one, if you break the large platforms into smaller companies, they will not compete on the stuff you want. They won’t compete on making their platform safer, they won’t compete on privacy. They’ll only compete on the stuff you don’t want, which is unadulterated growth. And if you have smaller platforms, they won’t be able to do things like hire 30,000 people to find all the bad stuff on Facebook. That is argument number one.

Argument number two: If you break up the large American tech companies, you will give an advantage to China, because there are certain technologies where you need large companies. For example, many kinds of artificial intelligence require massive data sets and massive compute, which you only have at the large tech companies. And it’s not like China is going after Alibaba. So as we head toward a technological cold war, the US government is kicking the tech platforms in the shins while the Chinese government is helping their large companies. So that’s number two. Mark didn’t make that yesterday, but others at Facebook have.

Number three: Tim, you have very specifically said that the antitrust remedy to Facebook is to split apart Facebook, WhatsApp, and Instagram, to unwind those mergers. You can argue whether they should have been approved or not. But they were approved. You said unwind them. And what Mark said yesterday is, hey, sometimes mergers are bad, no question. But these mergers were not. Instagram had 13 employees when Facebook bought it. It didn’t have an Android app. Without Facebook, Instagram doesn’t become what it is. It has become much more innovative because of Facebook, and the same can be said of WhatsApp.

So if you could take on those three arguments, we’ll go through them.

Tim Wu: Pleased to. Let me make a preface here and talk about my greater mission. I believe that we need to reinvigorate a great American tradition, and that is the tradition of antitrust. I think we have lost some of our pioneering spirit. It’s long been part of the American tradition to believe in competition, to believe in competitive markets, and Americans have always rebelled against concentrated power. A big part of the Constitution is dividing up power to make sure no one has too much. And it’s a big part of what we did in in 1890, in 1914, and again in 1950: pass antitrust laws, the goals of which were to put some controls on private power, and to keep markets competitive and prevent them from just becoming two or three big players. So that’s my big mission. That’s the curse of bigness. And that’s what I’m trying to do. I’m happy to take those arguments on in reverse order.

The first is the easiest. Mark Zuckerberg wrote an email when he was acquiring Instagram that was disclosed in the New York Post, and it suggests he was buying Instagram because he saw it as a competitive threat. Now, it is a felony under US law to buy companies that you believe are competitive threats to you. And so he was actually acting in a way that was illegal when he bought Instagram. The idea that Instagram would be nothing without the infusion of Facebook’s capital is untrue. Instagram already had enormous amounts of venture capital funding; they were kind of rolling in money. Also, and this is more important, what Mark Zuckerberg didn’t mention was that Twitter was trying to buy Instagram, to turn Instagram into a Facebook killer. Instagram was the most dangerous company for Facebook. Facebook had already destroyed a company like it, MySpace, earlier. Instagram was a bigger threat for two reasons: First, it was much stronger on mobile; second, it was better at photo sharing. As a commentator said at the time, Instagram had Facebook’s Achilles heel. The American way is that we believe in competition and that companies should fight it out, not buy each other when there’s serious competition. We established that principle with the Standard Oil Company. So the purchase of Instagram was, in terms of intent and effect, an illegal transaction. [Continue reading…]