Everything you can do
and its big tech counterparts can do bigger. The question is whether clear market domination prevents startups from even trying.
The Wall Street Journal reported Friday that state attorneys general will formally launch antitrust investigations into Facebook and
In Facebook’s case, it is difficult to argue that the sheer size of its current user base and resources isn’t affecting competition to some degree. A look at the innovations by U.S. competitor
’s Snapchat underscores Facebook’s competitive advantage. In late 2011, Snapchat launched based on the premise of disappearing images meant to be shared among selected friends. This was in stark contrast to the broad and more-permanent disclosure then enabled by Facebook, which has since shifted focus toward more-private conversations. By February 2017, Snap revealed in its IPO filing that it had roughly 158 million daily users. That growth rate was bolstered by the fast uptake of its stories format, which it introduced in 2013.
While that may seem impressive in a short period of time, context is everything. In 2016, Facebook introduced a similar stories format on its Instagram platform, later adding it to Facebook’s legacy app. Just eight months after its launch, 200 million people were already using Instagram’s stories daily, according to Statista. That uptake could only be reached by a platform that had already amassed a significantly larger overall user base.
This lopsided arms race has continued with both Snapchat and Facebook now offering similar formats for users to watch concentrated shows. Snap, which aired its first original show in 2016, said its first docuseries reached 28 million unique viewers in its first season, nearly 14% of the last reported daily user base. The company hasn’t disclosed how many overall viewers it has across all of its shows. Meanwhile, Facebook in June said that, less than a year after its global launch of Watch, the platform had more than 720 million monthly viewers and 140 million people tuning in daily.
Facebook is now reportedly developing a standalone messaging app for Instagram called Threads that looks to include many of Snapchat’s features such as sharing a user’s location with close friends. While it isn’t clear whether the new app will get off the ground, Snap’s stock fell nearly 4% the day the news broke.
Facebook’s user base has continued to grow owing in large part to its 2012 acquisition of Instagram, which the company said in June 2018 had more than a billion monthly users. Combined across its platforms, Facebook said in July it now has 2.7 billion monthly users.
When a representative at a congressional hearing earlier this year pointed out that Facebook owns four of the top six social networks by active users, Facebook’s head of global policy development denied that its platform is a monopoly. The hearing included testimony from
a Columbia law professor, who said he worried the U.S. is becoming a country where “inventors and entrepreneurs dream of being bought, not of building something of their own.”
To be fair, having Facebook breathing down Snap’s neck has hardly proved ruinous. Snapchat in the second quarter reported its largest growth in terms of daily active users in three years, for example. Its stock is up nearly 200% this year, while Facebook is up 43%. Despite recent outperformance, though, Snap has less than 10% of the daily users that Facebook enjoys across its portfolio of apps.
It isn’t that newer platforms can’t find success in the face of formidable incumbents today but rather that there may always be a limit to how big and how quickly they can grow. Whether or not that is enough to continue to inspire new innovation remains to be seen.
Write to Laura Forman at firstname.lastname@example.org
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