of the many complaints on FacebookOne comes consistently: it’s just too big. That’s why some critics and regulators want to shrink it by forcing Mark Zuckerberg to dissolve major acquisitions, like Instagram.
Zuckerberg’s answer: We get bigger by buying Moreover stuff.
After a brief slowdown in 2018, the year the Cambridge Analytica scandal broke, Facebook has consistently made large acquisitions – at least 21 in the past three years, according to data service Pitchbook.
Many of the deals have been announced since December 2020, when the US government filed an antitrust lawsuit against the company, accusing it of maintaining an illegal monopoly on social networks by buying or crushing competitors. The original suit is a revised complaint they aim to force Facebook to get rid of both Instagram and WhatsApp.
Over the past couple of years, Facebook’s appetite for offers has drifted away from Giphy, which allows you to insert funny GIFs in your social media posts, for Customer, an enterprise software company for Facebook’s corporate customers. Most of them, however, have been concentrated in one area: games and virtual reality. Which makes sense, since Zuckerberg formally announced that gaming and virtual reality, grouped under the expansive and hard-to-define column of “the metaverse, “They are the future of Facebook.
Hence the company name change to Meta. But what is more important is the promise that Facebook will engage thousands of its employees in the effort and expects to lose $ 10 billion this year alone, and more. “for the next few years. ”
The day after Facebook announced the name change, the company explained how it will spend some of that money: a deal to buy by, the company co-founded by virtual reality pioneer Chris Milk, best known for his Supernatural workout app People familiar with the transaction say Facebook paid more than $ 500 million for the company.
Other Metaverse offerings announced this year include Unit 2 Games, which creates a “collaborative game creation platform” called Crayta; Bigbox VR, which makes a popular game for Facebook’s Oculus VR glasses; Other Interactive shower, another VR game creator.
Those offers were already raising his eyebrows before Facebook formally announced that it represented the future of the company. So what should we think of them now?
That is: if you think Facebook in 2021 needs to be dissolved, in part to undo past deals like Instagram ($ 1 billion, 2012) and WhatsApp ($ 19 billion, 2014), then you shouldn’t even worry about deals that Zuckerberg is making now. to build the 2031 version of his company?
A Facebook rep was happy to explain the difference to me: Unlike social networks a decade ago, Facebook isn’t the leader in virtual reality / augmented reality / pick a name for it – many large, well-capitalized companies are spending a lot of time. and money on it. And, as he took pains to point out, Zuckerberg envisions a future in which Facebook is simply one of many companies in the metaverse.
Here is the recorded statement that the company issued to recode explaining the thesis:
“Investing and building products that consumers want is the key to success. We can’t build the metaverse alone – collaboration with developers, creators, and experts will be key. As we invest in the metaverse, we know we face stiff competition from companies like Microsoft, Google, Apple, Snap, Sony, Roblox, Epic and many more at every stage of this journey. “
Translation: In the short term, Facebook is Happy That Snap continues to try to sell sunglasses who record video and communicate with the phone because they are theoretical competitors for Facebook sunglasses who record video and communicate with the phone. And Facebook will also be happy next year when Apple will reportedly unveil its virtual reality headset, because it will compete with Facebook’s Oculus headsets.
But it’s also hard to imagine Facebook hoping Apple, Snap, and everyone else will be strong competitors forever. One of the main reasons Zuckerberg is interested in the metaverse, after all, is that he imagines it can give him a way to connect directly with his customers without having to depend on the phone duopoly of Apple and Google.
Facebook’s takeover madness also highlights the difficulty antitrust regulators have in dealing with a rapidly changing and unpredictable industry. Even the most aggressive antitrust measures we’ve seen in recent years are designed to go back in time and correct alleged mistakes.
Or are they focused on the present, like a law proposal that would prevent big platforms like Facebook from doing big business in the industries they own currently dominate.
So how do you look to the future and assume that Facebook – not Google or Epic Games or Roblox or a startup you’ve never heard of – will eventually dominate the metaverse? Especially when the metaverse doesn’t exist, it might never end up existing, or might it end up existing in some very different form than Zuckerberg, science fiction writers, tech executives, and investors imagine it can today?
I asked the Federal Trade Commission, the agency currently suing Facebook over its deals with Instagram and WhatsApp, what they think of Facebook’s metaverse ambitions and purchases, but I don’t expect to hear back, in part because l agency doesn’t want to talk about Facebook while it’s in a long battle with Facebook, but also because it probably doesn’t know what it thinks.
It’s worth pointing out here that the government doesn’t necessarily have to win a lawsuit or pass a law to slow or stop Facebook’s ambitions. Some tech investors I’ve spoken to say they believe Facebook is, at least temporarily, out of the social networking acquisitions market, simply because there are too many controls and hassle.
“It looks like it will be very difficult for Facebook in particular to acquire anything in the social space,” says a venture investor who has sold businesses to Facebook in the past.
And that could hold true not only for large acquisitions, but also for small “purchases” – disappointing company deals made just to get their engineers and other staff on Facebook’s payroll.
Washington has already signaled that it wants to pay more attention to small businesses: in September the FTC released an analysis of 616 transactions made by Facebook, Google, and other large tech companies over the past decade that weren’t large enough to activate regulatory oversight.
But the existence of the report makes it clear that regulators think they should look into more deals, not less. FTC Commissioner Rebecca Slaughter made it even clearer: “I think of serial acquisitions as a Pac-Man strategy,” he said when the report was released. “Every single merger seen independently may not appear to have a significant impact, but the collective impact of hundreds of smaller acquisitions can lead to monopoly behavior.”
You can argue whether Facebook has a monopoly on social networks today – the company is pleased to point out the near-sudden success of TikTok to argue that it doesn’t. But there is no doubt about its enormous wealth and power. The real question: Will we let him use those resources to extend his power into the future?