July 20, 2018

Recommended listening: Kara Swisher interviews Mark Zuckerberg

There is an intresting passage in the Recode Decode interview with Mark Zukerberg (the one that got him into so much travel for calling holocuast deniers "misinformed") in which he adresses the question if Facebook should be broken up.

His argument for why FB should not be broken up is rather strange: Essentially he argues that FB is so big because it is a global business. He then makes the argument that all of the costs are essentially in the US and that those costs are barely covered by US revenue and that all of the margin that FB makes comes from non-US business. This is of course feeding straigt into the "Value Gap" narrative (from an acounting perspective this is obviously complete nonsense as FB will have plenty of costs that should be attributed to it's non-us operations).

From any other perspective than a US perspective is probably more of a justification for breaking up FB than against breaking it up. He also finishes his somewhat rambling answer with a remark how FB is about exporting "our" (as in US) values to the rest of the globe.

[Kara Swisher]: Okay. So you can handle regulation. What about the call ... There’s been some calls to break up some companies like Facebook or Amazon that become too big. Are you in fear of that in any way?

[Mark Zuckerberg]: You know, I think that there’s ... It’s a very interesting debate overall. If you actually get down to why we’re big, it’s not ... In the traditional sense, we’re not big because we’re so big in the United States, although we are and a lot of people use our products here. If we weren’t an international company, if you said, “Okay, you have to shut down all of your services outside of the U.S.,” we actually would not be very profitable at all; we actually would probably be unprofitable.

So the reason why we are a successful and large company is because we have built something here that can now serve billions of people around the world as well, which is actually where all the margin comes from, in terms of ... I mean, we have the cost structure that we have, and then that’s where the business comes from and ... Don’t get me wrong, there’s a lot of revenue in the United States as well, but that would barely cover the cost of the company.

So I think you have this question from a policy perspective, which is, do we want American companies to be exporting across the world? We grew up here, I think we share a lot of values that I think people hold very dear here, and I think it’s generally very good that we’re doing this, both for security reasons and from a values perspective. Because I think that the alternative, frankly, is going to be the Chinese companies. If we adopt a stance which is that, “Okay, we’re gonna, as a country, decide that we wanna clip the wings of these companies and make it so that it’s harder for them to operate in different places, where they have to be smaller, then there are plenty of other companies out that are willing and able to take the place of the work that we’re doing.”