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“I Knew I’d Lose Some Friends” – Inside Co-Founder Chris Hughes’ Campaign Against Facebook

Courtesy of ZeroHedge. View original post here.

We can imagine Mark Zuckerberg, sitting ensconced in his bunker inside Facebook HQ, reading every new story about his one-time friend and Facebook co-founder Chris Hughes' campaign to force the breakup of Facebook, the company Zuckerberg worked so hard to build. 'How ungrateful,' Zuckerberg probably thinks to himself.

That's because Hughes has emerged as what the Washington Post characterized as "one of [Facebook's] biggest problems." It started with a sweeping New York Times op-ed, where Hughes declared that Facebook 'should be broken up' and that while he still thinks Mark Zuckerberg is "a good, moral person", as Chairman and CEO of Facebook, Zuckerberg has too much power.

Facebook

While Facebook gladly paid $5 billion to settle allegations of privacy violations with the FTC, the company is firmly opposed to any kind of anti-monopoly actions. Its argument is simple: Since consumers use social media apps that aren't controlled by Facebook (think Twitter and LinkedIn), it's clear that Facebook doesn't have a monopoly. And when asked about the status of his friendship with Zuckerberg after going public with his allegations, Hughes joked that Zuckerberg probably no longer considers him a friend.

The decision to publicly oppose Facebook in the op-ed was a difficult one, he said.

“I knew I would lose some friends over it. And that’s okay because some things are that important,” he said. “But it’s been nice on the other side of it, too, to have the argument out there, to speak my mind about what I think and believe.”

In a story about Hughes' campaign to undermine the company he helped create, a company that netted him a fortune ($500 million at the time he cashed out his stake). Hughes left Facebook in 2007 to volunteer for the campaign of then-Senator Barack Obama.

But now, according to WaPo, Hughes has been making the rounds on Capitol Hill, visiting dozens of lawmakers and regulators at the DOJ and FTC, and presenting a 39-slide PowerPoint deck that he purportedly made himself outlining his argument about Facebook being a monopoly.

Hughes' argument depends on the vast user base of Facebook and Instagram, and the company's acquisitiveness, which helps to stifle competition by discouraging challengers.

Facebook’s wealth and power and massive user base have pushed it into monopoly territory, and its acquisitions of rivals have squashed competition. More than 2.7 billion people use Facebook or its other platforms, which include Instagram and messaging service WhatsApp, at least once a month, Facebook said Wednesday.

"I hope that my speaking out provides cover to a lot of other folks, whether former employees or current ones, to express ambivalence or concern about what’s going on," Hughes said in an interview Thursday. "And I think there’s a lot to be concerned about."

The former Facebook spokesman is also trying to convince other ex-employees with reservations about the company's largess to speak out.

But the fact that a former executive are making these criticisms is a huge boon for trust-busters. It threatens not just Facebook, but the other tech giants of Silicon Valley. Hughes has effectively become the most effective lobbyist for the 'break up Facebook' crowd, and he's doing all of this work for free. 

And that's bad news for Facebook, because breaking up big tech has become a bipartisan issue, embraced by President Trump and Dems like Elizabeth Warren.

To be sure, Hughes isn't the only former Facebook executive or early investor to criticize the company: Sean Parker and Robert McNamee and other former senior executives have also criticized Facebook over its business practices, but they haven't been lobbying for breaking up Facebook.

Hughes has reportedly been a useful resource for anti-trust lawyers who have been working on a new argument for breaking up Facebook.

Soon after, Hughes was contacted by two prominent antitrust scholars, Scott Hemphill of New York University School of Law and Tim Wu of Columbia Law School. The two academics and longtime collaborators had been developing an argument for breaking up Facebook in the form of the slide presentation. To them, the purchase of Instagram and WhatsApp represented a “plain-vanilla violation of antitrust law, just low-hanging fruit,” Wu said in an interview. They began to pitch lawmakers and regulators together.

Academics and lawmakers who have worked with Hughes say he has helped explain the motivations and viewpoints of key players at Facebook, including Zuckerberg – although Hughes says he has no specific insider knowledge. They say Hughes can frame the business practices of present-day Silicon Valley in ways that jibe with largely untested antitrust laws that were written for major oil and rail companies decades ago.

[...]

Hughes’s feedback shaped the scholars’ case, as he helped them understand how executives in Silicon Valley think about competition — it tends to be measured by viral growth rather than by size, said Hemphill, the New York University professor. At the time, the two professors were working on a roadshow, which they asked Hughes to join.

Rhode Island Congressman David Cicilline say Hughes has helped inform his views about whether Facebook might be a monopoly.

"The thing that stuck with me…was he focused on Facebook’s revenue as a true measure of its role in the marketplace,” Cicilline recalled. "Facebook captures over 80 percent of all global social media revenue and controls 58 percent of the U.S. social media market. That’s significant."

So, how will Zuckerberg counter Hughes? The company has hired an army of lobbyists in the wake of its twin scandals, data privacy violations and its failure to stamp out fake accounts. But given his resources, Hughes is going to be a difficult critic to discredit and stamp out.


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