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Too Big to be Responsible?

As a child I was regularly riveted and horrified by the old 1931 black and white movie Frankenstein, where the actor William Henry Pratt (stage name Boris Karloff) portrays the monster. I would watch that movie as often as possible. Later, in at least one college course, I was schooled in the political and social analogies that can reasonably be drawn from Mary Shelley’s novel. People often refer, metaphorically, to some thing or system gone wrong as a ‘Frankenstein monster.’

Watching the news unfold around Facebook’s latest round of scrutiny, we can’t help but draw a reasonable analogy between the Frankenstein and Facebook stories. More specifically, the continuing scrutiny regarding the family of Facebook platforms and the corporation’s business practices begs the question whether the corporation, not unlike the monster, has become too big to be responsible.

Frances Haugen, the former Facebook product manager who worked on civic integrity issues for the corporate behemoth, stepped forward in a 60 Minutes broadcast (aired Oct 3, 2021) as the whistleblower who released tens of thousands of pages of the corporation’s internal research and related documents. Ms. Haugen contends that the research and documents she released is the evidence that Facebook is aware its various platforms are used around the world to spread various ills including hate, violence and misinformation, and that the corporation has hidden this evidence in favor of prioritizing profits above the real and collateral harm it creates.

We can all expect a significant amount of dissecting, editorial writing, interviewing, posturing, spin, debate, sound bites, and congressional hearings to follow the evidence provided by Ms. Haugen. We expect much if not most of the fanfare and outrage will be non-productive distractions, whether intentional or simply misguided rhetoric, which will have the effect of drawing critical attention and energy away from the primary question and problem: “Has Facebook become too big to be responsible?”

Nick Clegg, Facebook’s VP of Global Affairs, responding to a question by CNN’s Brian Stelter about the dangerous size of Facebook, acknowledged that no matter how hard it tries Facebook will never have full control over its platforms because it simply has too many users. In other words, yes, Facebook has become too big to be responsible. Here’s the link to that 10-minute interview, and Mr. Clegg’s critical response and insight can be viewed between minutes 1:35 and 3:00. In that same segment, Mr. Clegg acknowledges that government regulation of Facebook would be “really helpful” (that’s between minutes 2:45-3:00).

In Better Capitalism we address the need for rational government regulation, using Facebook as an example. In the case of Facebook, we conclude that regulation by itself would actually be a gift that further benefits Facebook by raising the bar to entry for new competitors. After presenting and arguing the economic and political reasons and benefits for enforcing the antitrust law the U.S. Government already has on the books, we close that section with the following paragraph advocating for the breakup of Facebook:

As a start, we take the position that breaking up Facebook is an action that can and should be pursued. (Full disclosure: Aaron and Paul are Facebook shareholders at the time of writing.) The concentrated power of Facebook is obvious, as are the economic and political risks of its concentrated power. Given that part of Facebook’s concentration of power came through acquisitions of other social networking companies, forcing divestiture of those companies is a natural remedy. Having Facebook, Instagram, and WhatsApp as separate companies would increase competition, increase customer choice, and decrease undue political influence. Although there could be a bumpy transition period for those companies as they return to independence, and prediction of company performance is always speculative, there are strong precedents indicating that the companies themselves could also end up being more efficient and valuable post-breakup. For shareholders as well as stakeholders more broadly and society as a whole, there is reason to expect mutual benefit from partnering to disperse Facebook’s concentrated power. This would also set a precedent for dispersing other overly concentrated powers that currently exist and would discourage companies, at least for a time, from pursuing such concentration of power.

We, the architects of Partnership Economics and authors of Better Capitalism, are by no measure anti-Facebook. We understand, nevertheless, as have generations of anthropologists, theologians, philosophers, and politicians before us, that absolute power corrupts absolutely. Any company, such as Facebook, that has grown so powerful and so big that it can no longer control or be responsible for the negative effects of its products and services is a company that has grown too big to exist and must be broken up.

This is the underlying policy question and decision that can’t be lost in the fanfare and outrage that follows Ms. Haugen’s disclosures. And in the case of Facebook, the best solution comprises two steps: first, break up Facebook at least according to its platforms (e.g., Facebook, WhatsApp, Instagram) and then regulate each like utilities (e.g., water/sewer, electricity, natural gas) are regulated.

Whether your desire is to protect capitalism as it is or to shape it into a better version of itself, there is common ground in the reality that corporations that are too big to be controlled by their own people, or too big to take responsibility for their services, are corporations that undermine and damage every version of capitalism. Thus, those are companies that must be dismantled. Even in the alternative and imagined perspective of Mark Zuckerberg, who we think would desire the reputation and legacy of a great capitalist, we reach the same conclusion because Zuckerberg will not realize a positive reputation or legacy for founding and defending a corporation that has grown too big to control or to take responsibility for its direct and collateral damages.

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