For months, President Trump and congressional Republicans have been verbally assaulting the country’s biggest internet companies. This week, the administration replaced rhetoric with action, as the Federal Trade Commission slapped Facebook with a record-breaking penalty for privacy violations and the Justice Department announced a broad antitrust inquiry into “market-leading online platforms.” The department didn’t say where the inquiry would lead or name specific targets, but its sights were clearly set on Facebook, Twitter, Google and Amazon.
These are steps in the right direction. But unless Congress passes a law giving internet users real privacy protections, including the right to control which bits of personal information can be collected and shared, consumers will remain vulnerable to companies like Facebook that collect and exploit their data.
The FTC case against Facebook illustrates the problem. The agency accused the social media giant eight years ago of making unfair and deceptive use of personal information, and the company signed a consent agreement in 2012 that was supposed to clamp down on these practices. But Facebook has been rocked by multiple privacy-related scandals in the years since, most notably the revelation that Cambridge Analytica had collected personal data surreptitiously from tens of millions of Facebook users in order to build profiles to help target political advertising. So much for deterrence.
Nor did the fine that Facebook agreed to pay Wednesday cause the company any real pain, even though it was almost 20 times larger than any privacy penalty the agency had levied in the past. Notably, the agency did not seek any fundamental changes in Facebook’s core business, which is monetizing its users’ personal information through highly targeted advertising. Hours after the $5-billion settlement was revealed, Facebook reported almost $17 billion in revenue for the second quarter alone, sending its shares nearly to an all-time high.
The Justice Department’s antitrust probe is about competition, not privacy, and its potential effects are more significant. Google, Facebook, Amazon and Apple all have used their dominance in one (or more) markets to help them compete in others, warping the playing field and driving out smaller rivals. The usual rebuttal from the tech giants has been that their moves benefit consumers — for example, by providing free services or more comprehensive answers to their inquiries. But choking off competition hurts consumers in the long run by reducing innovation and extracting higher prices in one form or another. That’s why it’s encouraging to see the Justice Department move forward on this, although we can’t help but notice that its targets all seem to be companies on the president’s very-public enemies list.