Cox: “China does it” is a bad antitrust argument

By Rob Cox

Facebook can make reasonable arguments about why the $530 billion internet company shouldn’t be broken up, either through regulatory pressure, legislative fiat or shareholder desire. The least persuasive of them is that the social network’s Chinese digital rivals won’t ever face the same fate.

That didn’t stop Chief Operating Officer Sheryl Sandberg from making that very case last week. “While people are concerned with the size and power of tech companies, there’s also a concern in the United States with the size and power of Chinese companies, and the realization that those companies are not going to be broken up,” Sandberg told CNBC, when asked about a call from one of Zuckerberg’s co-founders to split Facebook into a few smaller components.

Setting aside the fact that Tencent and Alibaba have respectively spun off their music and financial arms, the “but China does it” argument is becoming a familiar refrain from business and political leaders in the developed world. The extraordinary rise over the past decade of many private and state-backed companies in the People’s Republic is frightening competitors and freaking out policymakers. While their fears may be understandable, the danger for free-market economies is that they will respond in ways that effectively allow the Chinese Communist Party to shape the rules on competition at home.

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