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>Facebook’s “program of serial defensive acquisitions” was used to maintain the company’s dominance in the social networking industry. Instagram could be consi

>Facebook’s “program of serial defensive acquisitions” was used to maintain the company’s dominance in the social networking industry. Instagram could be considered a defensive acquisition. They should argue that the motive behind the acquisition was to expand their presence into mobile/imagery, which is different than defending social networking. Whatsapp I have a tough time seeing as anti-competitive, since it's a messaging platform rather than a social network, and one amongst many. The playbook is pretty clear for them: argue that they are in the digital advertising space, which is highly competitive, and argue that social networking itself is also competitive, with Snapchat, VSCO, Tinder and others as their competitors.

Despegar 7y ago
>Instagram could be considered a defensive acquisition. They should argue that the motive behind the acquisition was to expand their presence into mobile/imagery, which is different than defending social networking. I mean there's going to be discovery and depositions so "arguing" an after-the-fact justification is kind of pointless. Also New York Post already reported that the FTC had documents suggesting the Instagram purchase was to take out a competitor. >At the center of arguments to block the deal — made by then-FTC Chairman Jon Leibowitz — was a document the FTC had uncovered by a high-ranking Facebook executive who said the reason the company was buying Instagram was to eliminate a potential competitor, sources said. “It was a spectacular document,” one source close to the situation said, declining to say whether Facebook CEO Mark Zuckerberg himself had written it. https://nypost.com/2019/02/26/facebook-boasted-of-buying-instagram-to-kill-the-competition-sources/ https://nypost.com/2019/02/26/facebook-boasted-of-buying-ins...
- mogadsheu 7y ago
  Nice, what do you think of Whatsapp?
  - Despegar 7y ago
    This isn't even a question to me: it's obvious it was to take out competition in social networking. Facebook has network effects but their organic attempts at starting new apps constantly fail. Acquiring the ones that take off is the only avenue left. There's no other reason to spend $19B for a company with little to no revenue (and like 3 employees?).
    - Lammy 7y ago
      Starting new apps aren’t the only initiatives that fail. Whatsapp was the target to meet or beat for every single speed and reliability metric during the development cycle of Messenger 3.0 (2013).
  - TuringNYC 7y ago
    There is a bit of chicken-and-egg here because as a former tech co-founder, i'd argue that much of the risk of entrepreneurship was ameliorated knowing a larger player could acquire you if you do well. I wonder whether -- if FB/etc were not allowed to acquire budding successful startups -- whether 0. Founders would take the risk 1. Early engineers would take the risk 2. Angels/VCs would invest as much in them In which case you get fewer/none Instagrams/WhatsApps, because the risk is so much higher if your outcomes are limited to IPO/cashflow-business/lifestyle
    - aNoob7000 7y ago
      Maybe I'm going out on a limb here, but I think anti-trust in the age of tech and free services needs to be tweaked a little. Sure, Facebook can buy any company they like, but if it presents a danger to its core business like Instagram did, then the sale should not be allowed. Maybe Instagram wouldn't have survived without being acquired by Facebook, but let the market decide.
      - outside1234 7y ago
        This is why in the EU it is anti-competitive behavior that is targeted, not anti-trust.
        asr 7y ago
        Actually the US and the EU both target anticompetitive behavior. The US law is older and so is call antitrust for historical reasons, not because of a legal difference.
- annadane 7y ago
  I am so, so angry at Zuck's repeated public exhortations of "We care about you"... while ruthlessly crushing their competition and having repeated scandals. I don't like bad things people do in general but when it comes with a smile it makes me want to see heads roll.
- d1zzy 7y ago
  Companies buy other companies to eliminate competition all the time, it's normal, fair and expected. It's also not the only reason to make such a purchase, removing competition is just one variable out of many. I think the only time one can argue this shouldn't be allowed is for monopolies. Was Facebook considered a monopoly in the space where Instagram was competing in when it made the purchase?
nerfhammer 7y ago
instagram was tiny when facebook bought it. they hadn't even launched on android yet.
- onemoresoop 7y ago
  Instagram was the new thing and many FB users were abandoning them for Instagram. Facebook did grow Instagram but it's not like they gained new users, they mainly retained the original network in two different silos.
- 416chad 7y ago
  True, but the Android launch was seven days after the purchase... Surely its release was already imminent. Regardless, you're right and this is an interesting tidbit!
fauigerzigerk 7y ago
>...digital advertising space, which is highly competitive But is it really? Could a large advertsing customer realistically decide to avoid Google and Facebook or even just one of them?
argonaut 7y ago
Acquiring a competitor / acquiring market share describes >90% of acquisitions. Acquiring a competitor / buying market share is not in of itself anti-competitive. I can't think of anything anti-competitive that Facebook has done using their Instagram acquisition (cloning/out-executing your competitors is not in of itself anti-competitive).

Despegar 7y ago

>Instagram could be considered a defensive acquisition. They should argue that the motive behind the acquisition was to expand their presence into mobile/imagery, which is different than defending social networking. I mean there's going to be discovery and depositions so "arguing" an after-the-fact justification is kind of pointless. Also New York Post already reported that the FTC had documents suggesting the Instagram purchase was to take out a competitor. >At the center of arguments to block the deal — made by then-FTC Chairman Jon Leibowitz — was a document the FTC had uncovered by a high-ranking Facebook executive who said the reason the company was buying Instagram was to eliminate a potential competitor, sources said. “It was a spectacular document,” one source close to the situation said, declining to say whether Facebook CEO Mark Zuckerberg himself had written it. https://nypost.com/2019/02/26/facebook-boasted-of-buying-instagram-to-kill-the-competition-sources/ https://nypost.com/2019/02/26/facebook-boasted-of-buying-ins...

mogadsheu 7y ago
Nice, what do you think of Whatsapp?
- Despegar 7y ago
  This isn't even a question to me: it's obvious it was to take out competition in social networking. Facebook has network effects but their organic attempts at starting new apps constantly fail. Acquiring the ones that take off is the only avenue left. There's no other reason to spend $19B for a company with little to no revenue (and like 3 employees?).
  - Lammy 7y ago
    Starting new apps aren’t the only initiatives that fail. Whatsapp was the target to meet or beat for every single speed and reliability metric during the development cycle of Messenger 3.0 (2013).
- TuringNYC 7y ago
  There is a bit of chicken-and-egg here because as a former tech co-founder, i'd argue that much of the risk of entrepreneurship was ameliorated knowing a larger player could acquire you if you do well. I wonder whether -- if FB/etc were not allowed to acquire budding successful startups -- whether 0. Founders would take the risk 1. Early engineers would take the risk 2. Angels/VCs would invest as much in them In which case you get fewer/none Instagrams/WhatsApps, because the risk is so much higher if your outcomes are limited to IPO/cashflow-business/lifestyle
  - aNoob7000 7y ago
    Maybe I'm going out on a limb here, but I think anti-trust in the age of tech and free services needs to be tweaked a little. Sure, Facebook can buy any company they like, but if it presents a danger to its core business like Instagram did, then the sale should not be allowed. Maybe Instagram wouldn't have survived without being acquired by Facebook, but let the market decide.
    - outside1234 7y ago
      This is why in the EU it is anti-competitive behavior that is targeted, not anti-trust.
      - asr 7y ago
        Actually the US and the EU both target anticompetitive behavior. The US law is older and so is call antitrust for historical reasons, not because of a legal difference.
annadane 7y ago
I am so, so angry at Zuck's repeated public exhortations of "We care about you"... while ruthlessly crushing their competition and having repeated scandals. I don't like bad things people do in general but when it comes with a smile it makes me want to see heads roll.
d1zzy 7y ago
Companies buy other companies to eliminate competition all the time, it's normal, fair and expected. It's also not the only reason to make such a purchase, removing competition is just one variable out of many. I think the only time one can argue this shouldn't be allowed is for monopolies. Was Facebook considered a monopoly in the space where Instagram was competing in when it made the purchase?

nerfhammer 7y ago

instagram was tiny when facebook bought it. they hadn't even launched on android yet.

onemoresoop 7y ago
Instagram was the new thing and many FB users were abandoning them for Instagram. Facebook did grow Instagram but it's not like they gained new users, they mainly retained the original network in two different silos.
416chad 7y ago
True, but the Android launch was seven days after the purchase... Surely its release was already imminent. Regardless, you're right and this is an interesting tidbit!

fauigerzigerk 7y ago

>...digital advertising space, which is highly competitive But is it really? Could a large advertsing customer realistically decide to avoid Google and Facebook or even just one of them?

argonaut 7y ago

Acquiring a competitor / acquiring market share describes >90% of acquisitions. Acquiring a competitor / buying market share is not in of itself anti-competitive. I can't think of anything anti-competitive that Facebook has done using their Instagram acquisition (cloning/out-executing your competitors is not in of itself anti-competitive).