Experience Stern | Faculty & Research

When it comes to market failures, Meta has created the perfect storm. It is a de facto monopoly for social media. The information asymmetry of its algorithms and data capture methods deceives users and violates their privacy. It extracts huge wealth from the internet, the public good that hosts it. And it exacts enormous costs on its users in the form of mental illness and lost productivity. Actions to correct these failures have proven ineffective. The Federal Trade Commission’s on-going effort to break up Meta has not succeeded, legislative attempts to regulate social media have been inconsequential and Meta’s profitability permits it to indefinitely pay billions of dollars in civil penalties and private and class action damages.

It’s time for new thinking. In a recent paper, we describe a powerful, yet market-based method for redesigning firms that create intractable costs to society. The method requires no new laws or market tools, and it respects conservative principles of private property. We call it Capture, Redesign, Release (CRR). If applied to Meta, it would fundamentally change the firm and dramatically mitigate the market failures it produces.

In the Capture phase, a government such as the state of California or the federal government, would exercise its sovereign right of eminent domain to condemn the firm, and assign the right to purchase its shares to an independent “Purpose Trust.” The use of eminent domain might seem novel, but it is legally conservative based on how the Constitution is drafted and how the courts have upheld its use.

Read the full The Capitol Forum article. 
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Bruce Buchanan is C.W. Nichols Professor of Business Ethics and Professor of Marketing at NYU Stern. Hans Taparia is Clinical Associate Professor of Business and Society at NYU Stern.