⏩ Can the FTC really break up Facebook?

Dec 16, 2020

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This week: The antitrust case that shook the US, and the EU’s attempt to crack down on Big Tech. Plus, be glad you didn’t take the bar exam this year.

🦈 The legal justifications for the FTC’s plan with Facebook

You probably heard about one of the most colossal antitrust actions in history last week: The FTC accused Facebook of neutralizing competitive threats to attain power. It wants to break up Facebook by forcing the social media giant to sell Instagram and WhatsApp.

But can the FTC really do that? Here’s why it may be able to pull it off.

The breakup

It sounds crazy to think that the FTC could break up a massive company. But these actions were once fairly common. In the early 20th century, at the height of crackdowns on monopolies, the Supreme Court ruled that Standard Oil could be split into 34 companies. In 1982, AT&T agreed in a consent decree to break up its “bell” phone companies.

The legalese

Justification traces back to the Sherman Antitrust Act of 1890 and Clayton Antitrust Act of 1914. When a company is found to have violated the acts and become a monopoly, courts can side with a breakup penalty imposed by the FTC. That power was set by the Supreme Court precedent with Standard Oil.

Still, precedent doesn’t mean a guarantee. Judges are typically cautious and want to ensure they don’t create a worse situation with a breakup. As William Kovacic, FTC chair under George W. Bush, told Politico, “(Courts) are being asked to perform surgery and they want confidence the surgery is not going to kill the patient.”

Microsoft vs Standard Oil

Microsoft lost an antitrust case to the FTC in the 2000s. A trial judge ordered Microsoft to break into four separate companies focusing on Windows, software applications, e-commerce, and internet. An appeals court overturned the decision, and Microsoft made a settlement that did not require breaking off any parts of the company.

The same caution may be applied for Facebook. Plus, as one legal analyst told CNN, the FTC asked for Facebook to provide support to any separated company formed by the antitrust action. That request could mean Facebook still has sizable influence regardless of the outcome.

🤷🏽‍♀️ Europe isn’t making things easier for Big Tech

If Facebook and Google come out of their FTC lawsuits unscathed, their problems won’t end. The EU proposed new legislation Tuesday that industry analysts say is “the most aggressive legislative effort” targeted at Big Tech yet.

The legislation concerns Google, Facebook, Apple, and Amazon: Titled the Digital Services Act and Digital Markets Act, the bills would require companies to remove content deemed harmful by the EU and to adhere to a set of rules designed to prevent unfair competition. For example, CNN explains, the tech giants could not use data obtained from other businesses to compete with them.
The punishments are severe: The EU could fine companies as much as 6% of their annual global revenues if they don’t comply. Continued noncompliance could lead to bans.

But the rollout will be almost as slow-moving as an antitrust case

Tech companies are expected to push back. The proposals may take years before they become law and be watered down in the process.

The Verdict

As with the antitrust cases, the EU proposals put pressure on Big Tech. Companies like Facebook and Google may choose to compromise before anything drastic occurs.

📚 Was the “excruciating” bar exam harder online than in person? Depends on the state

There’s at least one thing you can be thankful for in 2020: You didn’t have to take the bar exam.

Many states adjusted: At least 23 jurisdictions offered online bar exams, according to Justia.
That didn’t mean the process was easy: Florida, for instance, announced in May it would have two locations for in-person exams on July 28 and 29. On July 1, Florida cancelled the exam and moved it to an online format for August 18 -- after test-takers had made plans for travel. Days before the August online exam, Florida cancelled it because of software complications and moved it to October.
Something similar happened in Indiana: The state had software problems, too and had to give the test open notes via email.

Scores were all over the place

Passage rates have trickled in the last couple months. The tortured law students of Florida passed at a rate of 72%, about two percentage points lower than those who took the test in summer 2019. Texas’ online bar exam in October had a 60% passage rate, far lower than the 77% in-person rate from September.

The story was different in Indiana and Michigan, where the passage rate was up 8 percentage points.

The Verdict

Megan Kilmer, who planned to take the California bar exam, described her experience to CNBC as “literal hell” and a “hazing ritual.” Will that ritual end? As we’ve discussed before, it could happen.

What else we’re forwarding

The FTC is angling for more info from Big Tech companies: Does the FTC ever sleep? It just asked for operations info related to data tracking from Reddit, Amazon, Facebook, Snap, Twitter, and several other tech companies.

A few tips for a digital detox over the holidays: Take a breather these next couple of weeks by following this advice from the NYT. One big suggestion? Stop caring about the artificial goals of social media by turning off nonessential push notifications.

End Note

Thanks for reading along and hope you’re getting excited for the holidays!

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Until next week,

🧐 Raad

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