Mark Zuckerberg personally lost the Facebook antitrust case | Hacker News Reader

Mark Zuckerberg personally lost the Facebook antitrust case

pluralistic.net

234 pointsthefox99 comments

“Competition is for losers” - A talk from Peter Thiel hosted by Y combinator (https://youtu.be/3Fx5Q8xGU8k?si=3anUMopHSJ4nKk2R)

Timestamp 13:50: “If you’re a startup, and you want to get to a monopoly, start with a really small market and you take over that whole market and then you find ways to expand that market in concentric circles”

Last I checked Zuckerberg is doing precisely what Thiel taught him to and has done it with preternatural skill.

This is the standard for how you’re expected to act as a technology “leader” - which the majority of VC backed unicorn goal founders (like every FAANG founder) have been executing since day zero.

It sounds like you’re saying the only way Y combinator makes money is when it’s illegal.

So let’s RICO them then I guess.

By itself, becoming a monopoly can be legal & ethical.

But once you have a monopoly, you're not allowed to do certain things like buying competitors for the purpose of crushing them.

I think the ethics of private enterprise is far from sorted long, long before getting to market-manipulation. Particularly in the US, where you're essentially obligated to take peoples' money at any cost.

What verifiable existing/attempting monopoly today is ethical?

They are about as ethical as non-monopoly businesses. Which is to say that some are bad and most are OK.

I guess some people think all business is unethical, but for those people monopolies don't change the sign.

> They are about as ethical as non-monopoly businesses.

No, my point/thesis is that, whatever non-monopolies can be, a monopoly is de-facto unethical.

If there is a legitimate reason that there's a monopolistic control over something, it then _has to_ become a public service, in the general interest.

And there is no actual existing monopoly today that could serve as a counter-example to that thesis.

It goes deeper than that. All publicly traded corporations are morally obligated by the Friedman Doctrine [0] to do stuff like this. If something returns value for shareholders (and monopolies do) then a CEO must do it. This is how the whole system is supposed to work. Of course, there's no reason that capitalism must to work this way, but this is the toxic form of capitalism that we've unwittingly chosen. Thiel just gave a playbook for implementing this in the tech space.

[0] https://en.wikipedia.org/wiki/Friedman_doctrine

It may be an obligation, but it's certainly not a moral one.

It's something untrue that people are told to believe - but it's in no way a real obligation, and isn't part of any fiduciary duty - it's just Friedman philosophying and selling it

Exactly! Unfortunately people lap it up as some ground truth when it is a dude providing a theory and as you said “selling it”

> Of course, there's no reason that capitalism must to work this way

There kinda is. Capital is allocated to where it makes most profits, and most profits go to companies maximizing shareholder value. In aggregate this makes the profit maximizing companies more likely to survive.

Sure this can be perhaps mitigated by e.g. legislating other duties to companies, but I'd say it's very hard even in theory, let alone in practice, to have capitalism without lopsided profit maximization.

So... Capitalism is bad for the people , communism is bad for the people.

What _is_ good for the people? Canada?

Man, more people should read Schumpeter. Capitalism is really good for rapid growth. The second the profit motive negatively affects the quality of the product or efficiency of its production a company should be nationalized to prevent the profit motive from destroying part of our economy (the actually-useful part, that is, not investors or shareholders or dividends).

But rapid growth is not necessarily _good_. Cancer is rapid growth.

That's exactly the point of his follow-up.

My point is that capitalism, as a system, has to adapt to survive, either its own demise through rapid/unlimited growth (like cancer), either through its replacement by something else (public service or some other structure).

Technology ironically. The stuff Peter talks about where Y=0. The covid vaccine inventors for example.

Other Y=0 things are people giving their lives for the greater good and basic rights. Geneva convention. Rights for black people, rights for women.

Infact the world runs on Y=0 stuff.

> Capital is allocated to where it makes most profits

We have worked ourselves into this frenzy over the past several hundred years, but especially over the past 25. We even describe it like you did, as an axiom or a law. But human action is people doing things, and modern economics masks unbridled greed as rules of 'science'.

It is enough to make a good living doing something worthwhile. There is no need to constantly seek highest returns. Nobility in action is possible. Capital does nothing, people do things with capital. Better choices are possible. All is not lost.

And of course, roughly 30% of all modern work-related activity is government. That part of our societal activity should be focused on creating guide rails to make sure that people do not pursue modern economic theory in the real world, but actually work to do good things.

> All publicly traded corporations are morally obligated by the Friedman Doctrine to do stuff like this.

That's a strange way to put it. As though it is the Right and Good way to run a company — and also as though the Board's/CEO's hands are somehow tied.

But they are. You may consider it be terrible. There’s a good argument for that, the original Ford versus Dodge case we started by allegations from Dodge that Ford paying its workers more was not in the interest of Ford’s shareholders. But there is no rational reason to pretend the obligation doesn’t exist.

If I'm reading this correct, there is no law that says they have to do this, but they have to do this.

The law says they have to do this. See https://en.m.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co.

Apparently, from my research, it's not the law.

There's fiduciary "duty", but not law. Judge's apparently give wide berth to management to decide what, perhaps long term, is going to be profitable.

Fair enough that makes good sense. What bothers me is that Ford’s actions probably were in a good long-term interests of Ford. It seems the ruling was very much focused on the short-term interests.

That is not a moral obligation, it is in fact the opposite. It is a lie that people tell themselves and the world to allow themselves to make immoral decisions for their own benefit.

I’m not saying running a company is easy and I know that many gray areas exist in the decision making. I do think companies can exist, profit, and be a net good for the world. However, we need to remove the notion that the duty to shareholder profits is a moral duty. It’s a cowards way out of having to make actual difficult choices. It’s one of those things that sounds great exactly because it allows you do horrible things with no responsibility. It creates a system where you offload the effort and weight of your decisions. As long as you’re are acting in the interest of shareholders, you are in the clear. That’s a dangerous concept and the opposite of morality.

It is the fiduciary duty of the CEO to do what’s in the best interest of shareholders.

In a working system it should be the governments responsibility to limit what a company can do

In the best interest of the shareholders might reasonably interpreted as, say, not destroying the biosphere. Fiduciary duty is certainly not "maximise profits whatever the consequences".

According to your logic, a CEO should attempt to destabilize and influence the government's responsibility so they can maximize shareholder value. And guess what, that is exactly what happens in reality. You can't just simplify reality into rules like this because it leads to people using those rules as an excuse to skirt responsibility and make actual difficult decisions.

Correct and this is why regulatory capture is the phase after market capture, to transition into legal monopoly.

I would recommend reading about the Friedman Doctrine and the time period where it came about. It is only a theory and not necessarily a good one.

Unless Saint Friedman got his "doctrine" from some higher power, it's just the oligarchy's first commandment.

In the first line of GP's reference in Wikipedia:

"The Friedman doctrine, also called shareholder theory, is a normative theory of business ethics advanced by economist Milton Friedman that holds that the social responsibility of business is to increase its profits."

Nobody is obligated to do this, its just that they say they are so they can extract the most amount of money from any situation and blame some vague principal. Plenty of companies leave money on the table because its terrible for everyone.

> If something returns value for shareholders (and monopolies do) then a CEO must do it. This is how the whole system is supposed to work.

Disagree. Shareholders are not the all and everything of a company. Neither they, neither the company exist in a void.

> Of course, there's no reason that capitalism must to work this way, but

How is that not a contradiction with the above?

> Shareholders are not the all and everything of a company.

I agree with you. But what you or I think doesn't matter.

> This is how the whole system is supposed to work.

My point is that our current form of capitalism is designed to work this way, but there's no requirement that capitalism must work this way. This is just the toxic form of market economy that we ended up with.

> But what you or I think doesn't matter.

1/ It does (because, it's false to say that "a CEO must do this or that" - or that's not a chief, a CEO, just an algorithm).

2/ it's less a matter of opinion than a matter of observing facts: shareholders are not the all and everything of a company. But my perspective may be that, being French, we have a history of having demonstrated the reality of this in actual actions, that USAmericans haven't yet.

People are gaslighted to think Friedman's Doctrine is a legal or moral obligation, because it makes money for capitalists.

But in fact, in USA there's even a SCOTUS ruling that says it is a bogus idea

Not sure why OP is getting downvoted. Going the premise of the cited doctrine, it follows precisely that even doing illegal things are acceptable as long as there is net gain until the expected future.

OP doesn’t even claim this is the one true doctrine or anything of the sort.

That is also one of his core arguments on his book "Zero to One".

To be fair, he is not the only one to think like that. Every "captain of industry" needs to be paranoid against competition. It is a basic survival instinct. Just look how much Steve Jobs freaked out about Android and Windows. Or how Alfred Sloan bought or merged every possible competitor. Or the history of Nabisco, the steel industry, Microsoft, AT&T, etc

And that's not a bad instinct which (in a perfect world) drives innovation and lowers prices for customers.

But that only works if the competition can not be simply bought out which requires effective anti trust laws before they get so big that "nobody" can compete.

I firmly believe that it's better to prevent a company from growing too big than breaking it up after the fact.

Almost everybody profits from smooth and constant enforcement.

Sure, but in non-digital markets we had a term for most common growth hacking tactics for attaining that niche monopoly.

Dumping. Operating on loss for years, just burning money to capture a market and then jack up prices and make competition unfeasible.

Which is illegal in most cases when it comes to physical goods. of course it depends on the region you're in - it is extremely illegal with sky high fines in my country for example.

Having the attitude to reach that goal is fine, but the goal itself(monopoly over segment of a market) should be impossible to reach. Whenever it happens markets get distorted to the detriment of all customers.

The whole point of capitalism is to put stress onto system for self-improvement - you need to produce better good, make it more efficient and cheaper, and find perfect balance between price and performance - to run economy as efficiently as possible while basically 'crowdsourcing' resource allocation computation over every market participant.

As soon as that stress is gone, you're back to Guilds system where nothing is dictated by market forces, just at whim of current entity in power.

The analogy with dumping is interesting. In the software world, near-zero marginal costs make it much harder to determine, but I guess the same concept does exist.

If companies are like processes then we need an OOM-killer for monopolies.

I remember many (many) years ago I used to frequent a small independent video rental shop. Then, one day a Blockbuster opened next door (and when I say next door, I do mean literally next door) offering a larger range of videos to rent and much cheaper prices. Within about three months the independent had gone out of business and shut down, at which point the Blockbuster jacked their prices up to what the independent had been charging.

It was incredibly blatant and I felt sorry for the poor guy that had been running the independent business.

Defensibility is pretty much one of the first topics raised by every investor, and thus ingrained into every founder: What is our moat? (e.g. how do we ensure no one else gets into our space until we're ready to choke out their air supply).

The word that is not used often to describe their worldview is the most accurate: medieval.

It isn’t just jargon. They are building castles against perceived enemies and everyone is an enemy. They are striving to be the Normans taking England, embedding themselves in every realm, region, barony, and parish, rewriting the rules in the name of progress either by woo or by force, and eliminating the natives. Up go the walls, round go the moats, and out point the guns.

The last startup I worked at was primarily concerned with loyalty above most else. Loyalty to what?

> Last I checked Zuckerberg is doing precisely what Thiel taught him to and has done it with preternatural skill.

...and the teachings from Bill Gates and Steve Jobs' mentorship.

> This is the standard for how you’re expected to act as a technology “leader” - which the majority of VC backed unicorn goal founders (like every FAANG founder) have been executing since day zero.

Except knowing how to deal with the time when anti-trust regulators are knocking on your door.

The stark difference between why Microsoft isn't being broken up vs Meta Platforms.

Thiel is such a disgusting person. People like him, greedy fucking capitalists, are the reason the world is slowly burning down.

All of this so he and his other billionaire friends can turn society into “network states” (privatized entities/corporate towns).

You're correct, this has been the prevailing culture in tech. This is the playbook.

But this isn't a good excuse. Players gonna play - we want them to play to win as hard as they can. But when we have safety guardrails and boundaries like antitrust, they're not supposed to just break through them.

Was he 'taught' by Thiel is that a thing that happened?

According to? What do they bring to the table? A dystopian future, greed and destruction. They are not my leaders.

I look to individuals like Bill Joy, Linus Thorvalds and Theo de Raadt. People who roll up their sleeves and build amazing things.

Parasites like Zuckerberg and Thiel can go to hell for all I care.

They are going there, but they have to build it first, here among us.

You remind me of this interview with Alan Kay:

https://futureofcoding.org/notes/alan-kay-lunch.html

In the piece the notion that what we need to solve our problems is more people like Joy, Torvalds and de Raadt and less people like Zuckerberg, Gates, and Bezos is gently alluded to, and I think it's a powerful point.

I'd nearly go on and suggest things like Tools for Conviviality, or some Cory Doctorow stuff. But in any case it's a lovely interview, maybe it's a good enough start.

This article would have been much better if it was at least a bit more direct. At the most crucial juncture, instead of including Zuck's own words, the author wrote the author's interpretation of his words and then an analogy.

> At this point, Zuck's CFO – one of the adults in the room, attempting to keep the boy king from tripping over his own dick – wrote to Zuck warning him that it was illegal to buy Insta in order to "neutralize a potential competitor."

> Zuck replied that he was, indeed, solely contemplating buying Insta in order to neutralize a potential competitor. It's like this guy kept picking up his dictaphone, hitting "record," and barking, "Hey Bob, I am in receipt of your memo of the 25th, regarding the potential killing of Fred. You raise some interesting points, but I wanted to reiterate that this killing is to be a murder, and it must be as premeditated as possible. Yours very truly, Zuck."

I mean this has been Cory's writing style for years. It should be no surprise.

I think he included, or linked to, enough direct quotes and references to allow him to editorialize as well, and get across his disdain (that many other share no doubt).

This is the man who coined the term "enshittification" after all.

The article talks about writing things down as if it's a negative, but surely we should applaud it? I don't want the lesson to be "don't write things down", I want it to be "don't break the law".

Negative only for Zuckerberg. The implication is that he was so arrogant and incompetent that he made a mistake (writing) that monopolists in other fields knew to avoid. Incriminating talk “should” happen only in person or on the phone if you don’t want to get busted.

> I don't want the lesson to be "don't write things down", I want it to be "don't break the law".

That would be great if the law was functional. US antitrust law is a low-level IQ test, whose only function is to catch the occasional stray careless CEO admitting to the crime, ignoring corporate training 101. The article puts it well:

> It's damned hard to prove an antitrust case: so often, the prosecution has to prove that the company intended to crush competition, […] It's a lot easier to prove what a corporation did than it is to prove why they did it.

In other words, think happy thoughts when crushing the competition. Like when Bezos was feeling charitable selling baby products at a massive loss until diapers.com was starved to death[1], and then jacking up the prices.

[1]: https://en.m.wikipedia.org/wiki/Diapers.com

You are constantly breaking the law. The lesson here is to stay popular and keep the right palms greased.

> Did Zuck buy Insta to neutralize a competitor? Sure seems like it! For one thing, Zuck cancelled all work on Facebook Camera "since we're acquiring Instagram."

I don't get this bit. That seems to be supporting exactly the opposite of the author's thesis. If the acquisition had existed only for "neutralizing a competitor", they would have continued work on their existing products in this space, no? Canceling their existing product and keeping the acquisition is more in line with them realizing Instagram was a service they couldn't hope to catch up with. It'd also be consistent with them wanting to carve out a larger niche for Instagram, by reducing the overlap between the two on Facebook's side.

It proves that Instagram is a /competitor/ and that Facebook (camera) lost the competition prior to the buyout.

Cory was great reading when I was a young adult but I've gotten older and he is still the same age. Not sure which is better, tbh.

The (good) movie Social Network makes a Fair portrait of Zuck and his awful personality traits.

It's really terrible to have somebody like him as the head of a powerful corporation that almost controls our minds.

> head of a powerful corporation that almost controls our minds.

I find this line of thinking disingenuous. No one is forcing anyone to participate in social media. At the same time, no one is responsible for others participating in social media. So what makes the CEO of Facebook so evil?

My theory is that he's dislikeable as a person, regardless of what his company is making money from.

That movie was made almost entirely based off of the story as told by people who were at the time suing Mark Zuckerberg. It is the farthest you can get from fair.

"...At this point, Zuck's CFO – one of the adults in the room, attempting to keep the boy king from tripping over his own dick – wrote to Zuck warning him that it was illegal to buy Insta in order to "neutralize a potential competitor."

Zuck replied that he was, indeed, solely contemplating buying Insta in order to neutralize a potential competitor. It's like this guy kept picking up his dictaphone, hitting "record," and barking, "Hey Bob, I am in receipt of your memo of the 25th, regarding the potential killing of Fred. You raise some interesting points, but I wanted to reiterate that this killing is to be a murder, and it must be as premeditated as possible. Yours very truly, Zuck...."

"In Zuckerberg's defense, he's not the only tech CEO who confesses his guilt in writing (recall that FTX planned its crimes in a groupchat called WIREFRAUD)."

Any similarity with other "tech CEOs" seems inculpatory more than exculpatory.

I guess truth social is going to find itself in a multi billion dollar buyout soon.

he will probably have to buy trump a yacht to get out of this one.

I think he's gonna have to offer up the naming off his child at minimum.

That’s more Musk’s thing.

It is a joke with a reference.

Famously, when Zucka was desperate to enter the China market he met with Xi Jiping at a dinner and asked him to chose a name for his child. In Chinese tradition that is a great honor reserved only for grandparents.

Xi famously declined and Facebook never set foot in China.

Really? Musk has offered naming rights of his offspring or personal gain on more than one occasion?

zuck already offered naming of his child to Xi Jinping and he was refused

Pretty sure Trump can buy as many yachts as he wants without Zuck's help

The anti-trust regulators have targeted almost all but one of the FAAMG companies and that is Microsoft, who certainly knows how to avoid a break-up of their entire company.

The rest have not dealt with totally removing their cases entirely, so it makes sense for the FTC and the DOJ to target everyone else first before lastly bringing up a massive case against Microsoft.

Perhaps that is their strategy in all of this.

How about renaming FB to Trumpbook?

There's a reason there's no M in FAANG. Unlike those "upstarts", Microsoft is more like the Lockheed Martin or GE of tech. There is so much Microsoft software in use in the gov't (especially the DoD) that it would be precarious to prosecute/regulate them.

> Microsoft is more like the Lockheed Martin or GE of tech

This analogy is apt in so many ways (in addition to the prevalence of MS software in the .gov setting)

That isn't the reason nor is that a convincing argument to not enforce anti-trust laws against a particular company. So one is allowed to have a monopoly in government software and the rest are not?

Reducing competition is one of the goals of a monopolist and anti-trust laws applies to all, no exceptions.

Don't you think there are other companies competing against Microsoft for government contracts like Amazon, Google or even Palantir that includes software?

Also, Apple isn't some "upstart" either.

> There's a reason there's no M in FAANG.

Yeah, there's a very simple reason: the FAANG acronym was coined around 2013 when Microsoft was still in a rut, Ballmer was still CEO, and their stock was still down from its dot-com bubble peak.

I'm pretty sure that at least part of the reason is that Netflix (despite being much less relevant) is in the Silicon Valley, while Microsoft is not.

So this is specifically a Silicon Valley / Hacker News thing (notably relevant to lifestyle and employment issues).

The rest of the world has been using GAFAM instead, even before 2013. (I've also seen "the big 5" sometimes.)

But Amazon is also based in Washington

Thanks, uh, I am not sure how I missed that...

He bought the competition, it should be an open and shut case.

This article is trying way too hard to dunk on Zuckerberg for… doing normal CEO things.

The whole premise seems to be that writing down your thoughts, asking questions, or being transparent in internal emails is somehow a huge self-own. But that’s just how people work—especially when you’re running a massive company and making fast, complex decisions. You write things down, explore ideas, get feedback. Acting like that’s a confession is lazy analysis.

The real problem here is that the author treats normal business strategy—like acquiring a rising competitor—as some kind of criminal mastermind move. Whether or not that should be legal is one debate. But pretending it’s shocking that a company would consider eliminating competitive risk? Come on. That’s what businesses do. If you want to critique the system, critique the system—not the fact that someone used it.

Also, the smug “ha ha, he wrote it down!” attitude is incredibly counterproductive. All it does is teach executives to stop documenting anything real. It punishes transparency and rewards corporate vagueness and CYA behavior. If that’s what we want more of, congrats—we’re on track.

The piece doesn’t offer any actual insight into how companies operate or how antitrust should evolve—it just ridicules someone for not being lawyerly enough in private. That’s not analysis, it’s court fan fiction.

I'll defer to Stringer Bell:

> Is you taking notes on a criminal fucking conspiracy?

"Normal CEO things" don't include committing crimes, and they are only a "huge self-own" when they document those crimes.

Look - he hasn't made any of his acquisitions any better and Whatsapp especially is a clear slam dunk antitrust case

I'm less interested in some of the political hatchet jobs people do against his company (namely Facebook) but his product sucks and it's been unusable for years

Some things are fine if done under the table, but aren’t fine if spoken out loud.

Arguably it's unacceptable either way, but only one of those ways can be evidenced in court.

From the way this article reads Zuck is being derided specifically for getting caught.

It shows a certain arrogance. Some kind of too big to fail

That's certainly true. But this is Cory Doctorow who invented the concept of enshittification. I'd be super surprised if he thought anti-competetive behaviour is fine as long as you get away with it. My take is that he's saying "Not only is Zuckerberg a greedy asshole, but he's even stupid enough to make it provable in court."

Probably with some shades of 'shameless' / "everybody I know is doing it, and if it's normal it can't be illegal" too.

I agree, I got the same impression when I was reading the article.

Correction: Some things are hard to prosecute if done under the table, and are not fine if spoken out loud :)

Ethics are essential in every decision, not because you can get in trouble legally, but because you are part of a society of people like you.

The problem is if money justify everything in the society where you live.

Then it becomes more imp to show people the right path. I've never found a society where money justifies everything, only people who have no ethics.

I understand this case is about Facebook and not Instagram, but these quotes might offer another perspective.

>they appear to be reaching critical mass as a place you go to share photos

>[Instagram could] copy what we’re doing now … I view this as a big strategic risk for us if we don’t completely own the photos space.

In a way, this is effectively saying that Instagram could itself become a monopoly (or put differently, come to monopolize). Right? Isn't that what Meta fears?

It makes me wonder if, at least in the case of social networks, there's a natural tendency toward monopolization. In other words, is there not LESS utility to the consumer if we have a bunch of small, competitive social networks duking it out?

I'm not here to excuse Meta and certainly this is the case for federation. I guess I'm left wondering, what exactly was Meta supposed to do?

There's a natural tendency towards monopolization in companies in general. But competition is good, as the alternative is stagnation (especially once a company gets powerful enough to sway governments).

Likewise, platforms are evil, and social network platforms in particular probably shouldn't be allowed to exist. Protocols don't have this fragmentation issue that I guess you are aiming at but never stating directly.

Facebook shouldn't have engaged in anticompetitive practices.

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