Facebook scooping up Instagram has to be one of the best corporate acquisitions over the past 20 years. Hindsight is 20/20 but it makes sense that a simpler social network like Snapchat and Instagram would be a threat to Facebook once everyone's grandma got an account. A really interesting counterfactual would be a world were Facebook, Instagram & Snapchat are all competing.
> A really interesting counterfactual would be a world were Facebook, Instagram & Snapchat are all competing.
Obviously, antitrust laws are among the many things I know nothing about, but it still difficult for me to understand how they can allow facebook, instagram and whatsapp to be one corporation.
> it [is] still difficult for me to understand how they can allow facebook, instagram and whatsapp to be one corporation.
With respect to Instagram, it's really not hard to understand - back in 2012 (when Facebook made the acquisition) Instagram had just 50 million users and made no money. It would have been ridiculous for anti-trust authorities anywhere in the world to step in. Remember too that the general consensus among a great many back then was that 1 billion dollars for Instagram was an absurd purchase price for what was perceived as a relatively tiny little start up with a very uncertain future.
While everyone likes to bash Facebook, the growth they have achieved with Instagram since acquiring it is pretty impressive, 50 million to a billion users in 6 or so years, and it's not like there wasn't significant competition along the way from Snapchat etc.
You mean a social network, an image sharing and a messaging app are all the same so couldn't be owned by the same company?
Anti-trust law doesn't prevent any form of consolidation. As a general guideline, the DOJ is only opposed to going from 3 to 2 competing offerings to customers.
Given the existence of countless other social networks, photo sharing websites and messaging apps, it would be hard to justify blocking any of these deals, especially in the case of Instagram which was still a very young and nimble company at the time of the acquisition.
The Chickenshit Club - "Why don't crooked corporate CEO's go to jail anymore? Pulitzer Prize-winning journalist Jesse Eisinger uncovers culture of cowardice, incompetence, and corruption in both government and finance."
> Obviously, antitrust laws are among the many things I know nothing about, but it still difficult for me to understand how they can allow facebook, instagram and whatsapp to be one corporation.
It's because anti-trust laws aren't well-equipped to deal with modern monopolies.
the US's legal framework for anti-trust come from the Sherman anti-trust act of 1890 and the Clayton anti-trust act of 1914 (note the dates). The jurisprudence basically holds that being a monopoly isn't illegal per se, but what's illegal is abusing consumers - traditionally the cause of action in anti-trust lawsuits are that a corporation does something anti-competitive to increase prices. Facebook is mostly available at no cost to consumers (or at least, consumers don't have to pay to use the products) and so they avoid anti-trust scrutiny.
To see it in practice, check out [1]. Some Japanese auto part suppliers were acting in an anti-competitive way and what got the DOJ so chuffed was that consumers had to pay more for cars and car parts because of the behavior.
The Yale law journal has a great expose on the tension between our 19th/early-20th century understanding of abusive monopolies and the realities of 21st century commerce [2] and basically the core issue is that anti-trust laws are powerless to stop a company from acquiring the power to become an illegal/abusive monopoly.
The EU has actually been much more skeptical/hostile of the arrangement between Facebook/Instagram/Whatsapp , and the best legal thinking on using anti-trust norms to break up big tech comes from the EU. Unfortunately, I don't know much about it and I'll invite any expert to weigh-in.
Facebook knows how to keep the government happy by just handing the NSA and whoever else all the data they hoover up. So I suspect they can get away with whatever and no one is going to say too much about it. They provide a great service to the powers that be!
Meanwhile their stock is up 30% since April. Either users don't care and will give up any privacy they have for a reasonably good "free" entertainment, or our Congress can do shit to the behemoth Facebook became.
> At least with WhatsApp they only have my Metadata...
Only until Facebook decides to weaken or eliminate its end-to-end encryption. It's surprising that feature has lasted this long, since it's so antithetical to Facebook's business model of slurping up every bit of personal data it can.
> e2e was delivered 2016, WhatsApp was acquired in 2014.
Both WhatsApp founders have left Facebook recently, and they were much more privacy focused than Zuckerberg and Sandberg. My understanding is they protected the WhatsApp team from the culture of the rest of Facebook, but now that they're gone I don't see that continuing in the same way.
They launched e2e encryption after acquisition. There is nothing which suggests it will be weakened. There is now e2e encryption in Messenger as well if you want to enable it.
> They won’t do that until they have a different app supporting E2E. Why would they voluntarily lose all E2E users to a competitor?
I would like to be optimistic, but the realist in me thinks the number of users for which end-to-end encryption is a vital feature is vanishingly small.
And maybe all FB needs to do to keep those users is to make end-to-end encryption on WhatsApp opt-in, so they can provide ~~"wonderful new features to you"~~ if you keep it off.
It's unclear if instagram would even be nearly what it is today without facebook, my guess is that both snapchat and twitter would've filled all the holes facebook was able to fill with instagram.
If they see any others as existential threats, yes, all of them. Facebook’s current valuation is $599 billion. Instagram was roughly $1 billion at the time it was acquired.
Facebook could acquire 100 more Instagrams and have every single one of them fail - or even shut them down - without all that much dilution.
(Cisco and EMC from 1990-2010 are successful examples of this strategy. See DataDomain, Isilon, Cerent, and arguably Crescendo for example acquisitions.)
Probably. I loathe Facebook as both a product and company, but I have to give them credit: they're smart and they know what they're doing. They're not going to be caught out easily by the usual "disruption".
Facebook knows the lifecycle of social media networks, and knows that the way to stay in front of the inevitable decay is to watch like a hawk for the New Thing and either buy it (Instagram, WhatsApp) or clone it and stomp it with network effects (Snapchat).
There’s lot of popular social media apps now or from before. Most don’t succeed the way Instagram and Whatsapp have. So it’s not as simple as just picking any. Yahoo picked up Tumblr, look how that turned out. Look how Snapchat is doing right now money-wise. Though of course that’s tougher to say since Instagram had a direct effect on hurting Snapchat.
Did anything get better after acquisition by Yahoo pre-Oath? I'm actually fine with trying different things and failing, but my spotty memory is Yahoo batted 0.000, Flickr surviving Yahoo by being acquired by smugmug seems like a moral victory more than anything as a fan of Flickr.
I feel like there will be less social networks and more things that accidentally become social networks. Something like reddit. I'm sure there are more examples. Things more organic.
