Cutouts of Zuckerberg outside the EU Parliament in Brussels (Source: PTI)

Facebook Loses EU Friends as Bloc's Lawmakers Weigh Break Up

(Bloomberg) -- Facebook Inc.’s founder Mark Zuckerberg probably realized he was on unfriendly territory when European Union lawmakers at Tuesday’s hearing threw in an early question: Can you tell us why your company shouldn’t be broken up?

After the smiles, selfies and handshakes, two of the assembly’s top legislators said Facebook’s monopoly power should be looked at by antitrust officials -- three years after parliamentarians urged regulators to weigh splitting up another Silicon Valley giant, Google.

The 34-year-old chief executive officer was asked if his social network was a monopoly, if he’d open the company’s books to the EU’s powerful antitrust regulators to prove it wasn’t and called on to convince lawmakers not to call for the company to be taken apart at a controversial meeting that sparked criticism from many in attendance over his lack of detailed answers.

German lawmaker Manfred Weber, the head of the assembly’s largest center-right group, told Zuckerberg he thought it was “time to discuss breaking the Facebook monopoly,” before asking: “Can you convince me not to do so?”

Hostile Politicians

Facebook’s efforts to win over hostile European politicians comes as internet platforms attempt to stave off new rules over how they run their business that increasingly pushes them to take responsibility for what users post. While the European Parliament alone can’t split up Facebook, its November 2014 call for EU antitrust action on Google helped accelerate an investigation into its shopping search service that fined the company $2.7 billion last year.

The social network exists "in a very competitive space, where people use a lot of different tools for communication," Zuckerberg replied. "So from where I sit, it feels like there are new competitors coming up every day, there are competitors that reach tens and hundreds of millions of people and we’re constantly needing to evolve our service in order to stay relevant."

Facebook has about 6 percent of the global advertising market and companies "also have a lot of choice in terms of where they choose to advertise," he said, touting Facebook’s "pro-competitive effect" of helping 70 million small businesses to reach customers.

Messenger and WhatsApp

Guy Verhofstadt, the Belgian leader of the European Parliament’s liberal party, asked Zuckerberg whether he’d accept splitting off Facebook Messenger and WhatsApp. He also quizzed him on cooperating with European antitrust authorities "to open your books so we can see if yes, or no, there is a monopoly."

Verhofstadt wasn’t satisfied with the answer he got and promised to send the CEO written follow-up questions that “he cannot escape.”

While the EU legislators urge action, Zuckerberg’s business is already under antitrust scrutiny in Germany. The Federal Cartel Office sees Facebook as the dominant social network in the country and is examining if it uses that power to force users to sign up to unfair privacy terms on how data is collected and processed.

"The limitless consent that Facebook is asking for is an inappropriate term and condition by a dominant company that the user cannot escape," Andreas Mundt, the cartel office’s chief, told a Rome conference on Tuesday. A user "has no choice if he wants to use Facebook."

Competition regulators are the ones "who can deal with these companies" and "expecations are high," Mundt said.

"I think we can do a lot but we cannot do everything" and new laws may be needed for some issues that online business models have raised, he said.

©2018 Bloomberg L.P.

Bloomberg
Stay Updated With Business News News On BloombergQuint