If the wrong regulations are picked all it will do is entrench Google/Facebook/et al. Regulations are usually pushed by the largest of the companies in an industry as it stifles new companies from starting as large companies are much better at bearing the cost of regulation. Hopefully the regulators are smart about this.
>Facebook’s “program of serial defensive acquisitions” was used to maintain the company’s dominance in the social networking industry.
Instagram could be considered a defensive acquisition. They should argue that the motive behind the acquisition was to expand their presence into mobile/imagery, which is different than defending social networking.
Whatsapp I have a tough time seeing as anti-competitive, since it's a messaging platform rather than a social network, and one amongst many.
The playbook is pretty clear for them: argue that they are in the digital advertising space, which is highly competitive, and argue that social networking itself is also competitive, with Snapchat, VSCO, Tinder and others as their competitors.
>Instagram could be considered a defensive acquisition. They should argue that the motive behind the acquisition was to expand their presence into mobile/imagery, which is different than defending social networking.
I mean there's going to be discovery and depositions so "arguing" an after-the-fact justification is kind of pointless.
Also New York Post already reported that the FTC had documents suggesting the Instagram purchase was to take out a competitor.
>At the center of arguments to block the deal — made by then-FTC Chairman Jon Leibowitz — was a document the FTC had uncovered by a high-ranking Facebook executive who said the reason the company was buying Instagram was to eliminate a potential competitor, sources said.
“It was a spectacular document,” one source close to the situation said, declining to say whether Facebook CEO Mark Zuckerberg himself had written it.
This isn't even a question to me: it's obvious it was to take out competition in social networking. Facebook has network effects but their organic attempts at starting new apps constantly fail. Acquiring the ones that take off is the only avenue left.
There's no other reason to spend $19B for a company with little to no revenue (and like 3 employees?).
Starting new apps aren’t the only initiatives that fail. Whatsapp was the target to meet or beat for every single speed and reliability metric during the development cycle of Messenger 3.0 (2013).
There is a bit of chicken-and-egg here because as a former tech co-founder, i'd argue that much of the risk of entrepreneurship was ameliorated knowing a larger player could acquire you if you do well. I wonder whether -- if FB/etc were not allowed to acquire budding successful startups -- whether
0. Founders would take the risk
1. Early engineers would take the risk
2. Angels/VCs would invest as much in them
In which case you get fewer/none Instagrams/WhatsApps, because the risk is so much higher if your outcomes are limited to IPO/cashflow-business/lifestyle
Maybe I'm going out on a limb here, but I think anti-trust in the age of tech and free services needs to be tweaked a little.
Sure, Facebook can buy any company they like, but if it presents a danger to its core business like Instagram did, then the sale should not be allowed.
Maybe Instagram wouldn't have survived without being acquired by Facebook, but let the market decide.
Actually the US and the EU both target anticompetitive behavior. The US law is older and so is call antitrust for historical reasons, not because of a legal difference.
I am so, so angry at Zuck's repeated public exhortations of "We care about you"... while ruthlessly crushing their competition and having repeated scandals. I don't like bad things people do in general but when it comes with a smile it makes me want to see heads roll.
Companies buy other companies to eliminate competition all the time, it's normal, fair and expected. It's also not the only reason to make such a purchase, removing competition is just one variable out of many.
I think the only time one can argue this shouldn't be allowed is for monopolies. Was Facebook considered a monopoly in the space where Instagram was competing in when it made the purchase?
Instagram was the new thing and many FB users were abandoning them for Instagram. Facebook did grow Instagram but it's not like they gained new users, they mainly retained the original network in two different silos.
True, but the Android launch was seven days after the purchase... Surely its release was already imminent. Regardless, you're right and this is an interesting tidbit!
Acquiring a competitor / acquiring market share describes >90% of acquisitions. Acquiring a competitor / buying market share is not in of itself anti-competitive. I can't think of anything anti-competitive that Facebook has done using their Instagram acquisition (cloning/out-executing your competitors is not in of itself anti-competitive).
I hate this ongoing PR attack on Google now being joined by politically ambitious state AG's. Google has done more positive things than any other company over the last twenty years. Instead of targeting bad companies that destroy people's lives (think gambling or alcohol or junk food), they are trying to destroy the company that gave us free search, maps, and email.
22 comments
[ 2.7 ms ] story [ 59.2 ms ] thread[1] https://www.popehat.com/2016/06/14/lawsplainer-its-not-rico-...
Instagram could be considered a defensive acquisition. They should argue that the motive behind the acquisition was to expand their presence into mobile/imagery, which is different than defending social networking.
Whatsapp I have a tough time seeing as anti-competitive, since it's a messaging platform rather than a social network, and one amongst many.
The playbook is pretty clear for them: argue that they are in the digital advertising space, which is highly competitive, and argue that social networking itself is also competitive, with Snapchat, VSCO, Tinder and others as their competitors.
I mean there's going to be discovery and depositions so "arguing" an after-the-fact justification is kind of pointless.
Also New York Post already reported that the FTC had documents suggesting the Instagram purchase was to take out a competitor.
>At the center of arguments to block the deal — made by then-FTC Chairman Jon Leibowitz — was a document the FTC had uncovered by a high-ranking Facebook executive who said the reason the company was buying Instagram was to eliminate a potential competitor, sources said.
“It was a spectacular document,” one source close to the situation said, declining to say whether Facebook CEO Mark Zuckerberg himself had written it.
https://nypost.com/2019/02/26/facebook-boasted-of-buying-ins...
There's no other reason to spend $19B for a company with little to no revenue (and like 3 employees?).
0. Founders would take the risk
1. Early engineers would take the risk
2. Angels/VCs would invest as much in them
In which case you get fewer/none Instagrams/WhatsApps, because the risk is so much higher if your outcomes are limited to IPO/cashflow-business/lifestyle
Sure, Facebook can buy any company they like, but if it presents a danger to its core business like Instagram did, then the sale should not be allowed.
Maybe Instagram wouldn't have survived without being acquired by Facebook, but let the market decide.
I think the only time one can argue this shouldn't be allowed is for monopolies. Was Facebook considered a monopoly in the space where Instagram was competing in when it made the purchase?
But is it really? Could a large advertsing customer realistically decide to avoid Google and Facebook or even just one of them?