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What would breaking up Facebook look like? Most features of Facebook couldn't operate as standalone businesses without creating their own massive ad networks.

coupdetaco 9y ago
Facebook the company, not facebook the application.
titanomachy 9y ago
Instagram and WhatsApp worked fine before they were part of Facebook.
- 734786710934 9y ago
  Both were being run off of VC money when Facebook acquired them. They would be in Snapchat's shoes right now if they were still independent.
- wemdyjreichert 9y ago
  They are not the issue so much as FBs core business.
JumpCrisscross 9y ago
> What would breaking up Facebook look like? Crack it along its social graph(s) or separate the platform (which would become a regulated utility) from the advertising business. Mergers offer four broad categories of synergies [1]: demand-side, supply-side, political and administrative. Airline mergers are usually about demand-side synergies. Having more market share gives you better data about future trends. It also gives you pricing power. Media/telecom mergers tend to rely on supply-side synergies: prices won't be raised, but content suppliers can be squeezed for distribution. When Lockheed Martin bought Sikorsky it acquired lots of employees in Connecticut [2]; that bought them some bulldogs in the Congress. (Administrative synergies are mostly B.S.; they fall into the "you have an accounting department, we have an accounting department, combined we can have just one" category and were mostly disproven in the post-WWII conglomerate boom.) Facebook is a super aggregator [3]; it has both demand-side and supply-side monopolistic synergies. Cracking the demand side means users go to sleep with a Facebook account and wake up with a Facebook No. 3 account. (Or to sleep with an Instagram account and wake up with an Instagram account.) This worked for AT&T and could be done today (at significant expense to Facebook's shareholders as it was to Standard Oil's, AT&T's and Microsoft's). Cleaving social graphs is complicated. But we understand graph theory better today than we did in AT&T's days. Bonus: require an open inter-operability standard if these networks want to interconnect. Cracking the supply side would involve taking related advertisers and hiving them off into a separate advertising company. The Facebook platform left would be a natural monopoly, regulated like a utility, serving dual profit and public roles. (Messenger, Instagram, M, and other relatively-discrete products would similarly be spun off.) TL; DR The novelty of breaking up a Facebook is superficial and finds precedent in antitrust enforcement history. [1] https://www.investopedia.com/terms/s/synergy.asp https://www.investopedia.com/terms/s/synergy.asp [2] http://www.courant.com/business/hc-sikorsky-connecticut-20160920-story.html http://www.courant.com/business/hc-sikorsky-connecticut-2016... [3] https://stratechery.com/2017/defining-aggregators/ https://stratechery.com/2017/defining-aggregators/
- wemdyjreichert 9y ago
  Good analysis, but the inherent nature of Facebook (and indeed all social media) is that it bridges these social divides.
Ericson2314 9y ago
Who cares! Why should companies that only work as monopolies receive extra leeway against anti-trust laws? I cannot think of a compelling reason.

coupdetaco 9y ago

Facebook the company, not facebook the application.

titanomachy 9y ago

Instagram and WhatsApp worked fine before they were part of Facebook.

734786710934 9y ago
Both were being run off of VC money when Facebook acquired them. They would be in Snapchat's shoes right now if they were still independent.
wemdyjreichert 9y ago
They are not the issue so much as FBs core business.

JumpCrisscross 9y ago

> What would breaking up Facebook look like? Crack it along its social graph(s) or separate the platform (which would become a regulated utility) from the advertising business. Mergers offer four broad categories of synergies [1]: demand-side, supply-side, political and administrative. Airline mergers are usually about demand-side synergies. Having more market share gives you better data about future trends. It also gives you pricing power. Media/telecom mergers tend to rely on supply-side synergies: prices won't be raised, but content suppliers can be squeezed for distribution. When Lockheed Martin bought Sikorsky it acquired lots of employees in Connecticut [2]; that bought them some bulldogs in the Congress. (Administrative synergies are mostly B.S.; they fall into the "you have an accounting department, we have an accounting department, combined we can have just one" category and were mostly disproven in the post-WWII conglomerate boom.) Facebook is a super aggregator [3]; it has both demand-side and supply-side monopolistic synergies. Cracking the demand side means users go to sleep with a Facebook account and wake up with a Facebook No. 3 account. (Or to sleep with an Instagram account and wake up with an Instagram account.) This worked for AT&T and could be done today (at significant expense to Facebook's shareholders as it was to Standard Oil's, AT&T's and Microsoft's). Cleaving social graphs is complicated. But we understand graph theory better today than we did in AT&T's days. Bonus: require an open inter-operability standard if these networks want to interconnect. Cracking the supply side would involve taking related advertisers and hiving them off into a separate advertising company. The Facebook platform left would be a natural monopoly, regulated like a utility, serving dual profit and public roles. (Messenger, Instagram, M, and other relatively-discrete products would similarly be spun off.) TL; DR The novelty of breaking up a Facebook is superficial and finds precedent in antitrust enforcement history. [1] https://www.investopedia.com/terms/s/synergy.asp https://www.investopedia.com/terms/s/synergy.asp [2] http://www.courant.com/business/hc-sikorsky-connecticut-20160920-story.html http://www.courant.com/business/hc-sikorsky-connecticut-2016... [3] https://stratechery.com/2017/defining-aggregators/ https://stratechery.com/2017/defining-aggregators/

wemdyjreichert 9y ago
Good analysis, but the inherent nature of Facebook (and indeed all social media) is that it bridges these social divides.

Ericson2314 9y ago

Who cares! Why should companies that only work as monopolies receive extra leeway against anti-trust laws? I cannot think of a compelling reason.