The Federal Trade Commission (FTC) and the attorneys-general of 46 US states filed lawsuits last Wednesday seeking what amounted to a do-over on Facebook — the chance to reject two acquisitions that helped make the social network the behemoth it is today.
Those acquisitions — the $1bn purchase of mobile picture-sharing network Instagram in 2012 and the $19bn purchase of messaging service WhatsApp two years later — absorbed fledgling companies that had threatened to draw users away from Facebook. Yet the FTC initially approved both mergers, and the states did not try to stop them at the time they were announced.
The states and FTC allege that the purchases fit into a troubling pattern of steps by Facebook to buy up or beat down rivals. Those allegations, based on documents and other evidence gathered by state and federal investigators, speak to the kind of anticompetitive tactics that might be ignored in a start-up but can’t be countenanced in a market-leading firm.
The best response to many of the problems Facebook poses would be to have real, vibrant competition among social networks that gives users better options for privacy, reliability and authenticity. Yet Facebook is hardly the only player in the market for social content sharing — YouTube, Snapchat, LinkedIn, Twitter and TikTok are all popular in the US, and China-based WeChat has more than 1-billion users.
Given its reach and user base, Facebook will remain dominant for some time with or without Instagram and WhatsApp. Simply forcing it to divest itself of those pieces isn’t likely to create the necessary competition; no-one can know whether either one of those companies would have evolved into effective competitors to Facebook had they not been swallowed up years ago.
To give competition a chance to blossom, Facebook’s users need to be able to switch easily to unaffiliated apps and services while retaining their connections to one another, just as customers of the local Bell telephone companies needed to be able to choose an unaffiliated long-distance carrier or phone manufacturer after the break-up of AT&T.
Innovative rivals need to be able to establish footholds in social networking without being cut off from Facebook’s users, as Twitter was when it introduced the Vine video-clip service in 2013. /Los Angeles, December 10
Los Angeles Times
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.