The Federal Trade Commission is beginning an anti-trust suit against Meta. This time it involves its owning What’s App and Instagram. Their argument is a monopoly exists with owning these acquisitions, they wanted to neutralize a potential competitor, and they should be spun off.
BACKGROUND
A report on National Public Radio gives a background of the government’s case against Meta:
“The government contends that a “buy or bury” strategy propelled Meta’s acquisitions, leading Meta to gobble up competitors it viewed as threats, or to squash the rivals out of business altogether.”
It adds that an internal Meta email says they purchased Instagram to “neutralize a potential competitor” and the FTC believes this is against federal law.
The report says that Meta will summarize its argument that it is being punished for being innovative and aggressive, in other words…. successful.
According to Wikipedia, Meta/Facebook has acquired 91 companies, including What’s App and Instagram. They have also acquired an interesting company—Onavo. Onavo was an Israeli company in business to acquire and analyze data on a client’s competitors. Facebook has apparently used this to track successful startups for acquisition. The website www.onavo.com has a Facebook message that says something has gone wrong. Facebook changed it to Facebook Israel, which promotes travel to Israel. It has also apparently deleted numerous posts about Palestinians.
In 2010 Facebook posted a video available on YouTube. In it Mark Zuckerberg talks about the theory behind Facebook acquisitions. He says that Facebook, up until then, had acquired companies not to keep the company but to acquire the talent behind it. In other words, the owners become employees (once again) and the startup disappears. The official line is that this is growth to them. However, it is entirely possible to acquire good talent through direct hire, including through employee search, instead of going the acquisition route.
According to Wikipedia What’s App was founded in 2009 by two individuals, Brian Acton and Jan Koun, previously with Yahoo! They received venture capital backing. They sold the company to Facebook in 2014. Acton left What’s App in 2017 over disagreements with Facebook. Later that year he founded the competing app Signal. Koun left the following year, also with conflicting issues with Facebook.
ANALYSIS
There is nothing wrong with companies like Facebook/Meta with being successful. This is Meta’s argument. However, the end does not justify the means in this case. Defining success through innovation – that which you started yourself from scratch – is not the same as defining it via acquisition. And if you have acquired 91 companies, that in and of itself should warrant charges of being a monopoly. I am not sure if people in the FTC under the Trump administration have a true anti-trust focus. Trump supporters seem to be focused more on going after the social media apps more for suppressing freedom of speech.
SOLUTION
Breaking up the acquisitions and returning them to independent status is, IMO, a good solution. This would return them to a position again of charting their own course. Meta will present their arguments, and some may have some weight. It really comes down to balancing the arguments and determining which has a greater priority.
The FTC’s argument is that Meta seeks to neutralize a potential competitor. If judicial decisions like this fail in the courts, federal law would need to be strengthened to make the anti-trust arguments more airtight. The law, for federal judges to agree, should be written such that it promotes what is in the best interest of the country as a whole, and not one just for individual business.
