FTC files new antitrust complaint against Facebook
Seeing some weird comments that disregard a lot of public history about exactly <i>why</i> there are anticompetitive complaints about Facebook in the first place. A quick breakdown of some of the common criticisms I've been seeing about whether Facebook is anticompetitive, and why they don't really stand up to scrutiny:<p>----<p>1. The nature of social networks is such that the landscape can change overnight. Do we need anticompetitive enforcement?<p>Correct, social networks can change overnight. But leaked documents[0] show that Facebook was aware of this (having gone through such a shift already with Myspace), and that they used purchases specifically as a defense against this phenomenon.<p>Facebook's plan was to use purchases to slow down the market and to make sure that no other competitor could grow large enough to be a threat. Zuckerberg said of this:<p>> "There are network effects around social products and a finite number of different social mechanics to invent. Once someone wins at a specific mechanic, it’s difficult for others to supplant them without doing something different."<p>A large part of Facebook's strategy to avoid the fate of MySpace was to lock down the network effects and make sure that no other company had the time or resources to win at any social mechanic before Facebook got its foot in the door. It is specifically <i>because</i> of the ever-changing nature of the social landscape that Facebook pursued anticompetitive strategies and purchases.<p>Their purchasing strategy was designed to make these kinds of large market shifts impossible, not because Facebook could compete with every one of these companies, but because they would fold any existing userbase/featureset into Facebook before competitors got a chance to build a competitive userbase.<p>----<p>2. But Instagram/WhatsApp weren't even competing in the same space! Why would Facebook target them?<p>Facebook undeniably considered those companies to be competitors and threats. Again, this isn't theorizing, you can go read the leaked emails yourself if you don't believe me[1].<p>Here's Zuckerberg again:<p>> "Instagram can hurt us meaningfully without becoming a huge business."[2]<p>A little while later, he responded to another internal email:<p>> "I remember your internal post about how Instagram was our threat and not Google+. You were basically right. One thing about startups though is you can often acquire them. I think this is a good outcome for everyone."<p>Even later, on messaging apps, he wrote:<p>> I think we should block WeChat, Kakao, and Line ads. Those companies are trying to build social networks and replace us. The revenue is immaterial to us compared to any risk. I agree we should use ads to promote our own products, but I'd still block companies that compete with our core from gaining any advantage from us.<p>----<p>3. But is Facebook even a threat anymore? TikTok is where the kids are!<p>Facebook spent around 6 months trying to buy TikTok early in its life[3], and (opinion me) I think the only reason it didn't pan out was because it was operating out of China and the deal was too complicated to close. After TikTok started to become a meaningful competitor, Facebook launched a public campaign painting the app as a national security threat.<p>Personally, I don't think it's a good long-term trend in the market that the only upstart social networks that seem to be able to meaningfully threaten Facebook are the ones coming out of China. And it's not clear to me that a startup American company today could replicate TikTok's success against Facebook.<p>----<p>[0]: <a href="https://arstechnica.com/tech-policy/2019/11/facebook-sold-competition-quashing-as-a-privacy-move-leaked-documents-show/" rel="nofollow">https://arstechnica.com/tech-policy/2019/11/facebook-sold-co...</a><p>[1]: <a href="https://www.parliament.uk/globalassets/documents/commons-committees/culture-media-and-sport/Note-by-Chair-and-selected-documents-ordered-from-Six4Three.pdf" rel="nofollow">https://www.parliament.uk/globalassets/documents/commons-com...</a><p>[2]: <a href="https://www.theverge.com/2020/7/29/21345723/facebook-instagram-documents-emails-mark-zuckerberg-kevin-systrom-hearing" rel="nofollow">https://www.theverge.com/2020/7/29/21345723/facebook-instagr...</a><p>[3]: <a href="https://www.buzzfeednews.com/article/ryanmac/zuckerberg-musically-tiktok-china-facebook" rel="nofollow">https://www.buzzfeednews.com/article/ryanmac/zuckerberg-musi...</a>