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Why Facebook’s acquisitions of Instagram and WhatsApp are worse than you think


A retrospective on the FTC’s biggest oversight.

Photo by Will Francis

Chris Hughes, one of the co-founders of Facebook, recently wrote a piece called “It’s time to break up Facebook”. This comes after Facebook received a gentle slap on the wrist from the FTC, in the form a fine for upwards of 5 billion dollars.

Chris’ article runs down how Facebook has grown into an uncontrollable behemoth and is a threat to the world at large. He calls for better government regulation and to split Facebook into multiple companies.

For reference sake, Facebook’s core competencies are:

Somehow, despite this and Facebook’s market share, they were still allowed to buy both Instagram and WhatsApp. Oculus VR was a unique company and Facebook had no real competitor. The same cannot be said for Facebook’s other acquisitions. The FTC can intervene in acquisitions that are consolidations of a market. They failed to act in this case.

Facebook buying Instagram right before their IPO is not a coincidence.

Matt Cohler was an early Facebook employee. He also was a board member and investor in Instagram. . Facebook stock options made Matt very rich and the extra shares he received as a part of the Instagram acquisition, made him even wealthier.

Through his involvement with Instagram, Matt likely had much more information on Facebook’s financials and other insider details than the public. This put him at a unique advantage How is this different from insider trading? This is a huge conflict of interest.

It’s clear that the FTC needs people who actually understand technology. There are increasing conversations about Facebook being a monopoly. The time to have these conversations was before both acquisitions were approved. The fine will not change Facebook either.

Tech journalists seem to agree with this sentiment.

Facebook likely was given a pass by the FTC to complete their acquisitions because of their relative newness as company, but this has been a grave mistake. It is impossible to truly calculate how much potential innovation was lost because of Facebook’s monopoly.

There are other huge concerns such as the damage Facebook has caused by allowing manipulation of the news during the last US Presidential election, as well as privacy concerns as Facebook continues to share user data outside of the platform.

As Facebook plans to further “integrate” Instagram, WhatsApp and Facebook, as a means to share data, consumers are more at risk than ever.



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