Later many complaints about Facebook, one person was consistent: It’s too big. That’s why some critics and regulators want to shrink it by forcing Mark Zuckerberg to cancel major acquisitions, like Instagram.
Zuckerberg’s Answer: Get Bigger By Buying than material.
After slowing down briefly in 2018, the year the Cambridge Analytica scandal erupted, Facebook has consistently made major acquisitions — at least 21 in the past three years, according to data service Pitchbook.
Multiple deals have been announced since December 2020, when the US government first filed an antitrust lawsuit against the company, accusing it of maintaining an illegal monopoly in the social network by buy or crush competitors. Original suit and one Amendment complaint to force Facebook to divest from both Instagram and WhatsApp.
Over the past few years, Facebook’s appetite for transactions has led to Giphy, which allows you to place funny GIFs in your social media posts, to Kustomer, a business software company for Facebook’s corporate customers. However, most of them focus on one area: gaming and virtual reality. This makes sense, since Zuckerberg has officially announced that games and virtual reality, lumped together in an extensive and hard-to-identify review, are “metaverse, ” Is the future of Facebook.
Therefore, the company changed its name to Meta. But more important is a promise that Facebook will push thousands of its employees to join the effort, and plans to lose $10 billion this year and beyond.”in the next few years. ”
The day after Facebook announced the name change, the company illustrated how it would spend some of that money: a purchase agreement within, the company co-founded by VR pioneer Chris Milk, best known for Supernatural workout app. People familiar with the transaction say that Facebook paid more than $500 million to the company.
Other Metaverse-y deals announced this year include 2 . unit game, creating a “cooperative game creation platform” called Crayta; Bigbox VR, a popular game for Facebook’s Oculus VR glasses; and Download Interactive, another VR game maker.
Those transactions were raised eyebrows before Facebook officially announced that they represented the future of the company. So what should we think about them now?
That is: If you think in 2021 Facebook needs to break up, in part to undo transactions from the past like Instagram ($1 billion, 2012) and WhatsApp ($19 billion, 2014), you shouldn’t either. worried about Zuckerberg’s dealings. What is his company doing now to build the 2031 version of his company?
A Facebook rep was happy to explain the difference to me: Unlike the social network a decade ago, Facebook is not a leader in virtual/augmented reality/pick one. name for it – lots of large, well-capitalized companies are spending a lot of time and money on it. And, as he goes to great lengths to point out, Zuckerberg envisions a future where Facebook is simply one of several companies in the metaverse.
Here is the archival statement the company provided to Recode explaining the point:
“Investing in 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 crucial. As we invest in the metaverse, we know we face fierce competition from companies like Microsoft, Google, Apple, Snap, Sony, Roblox, Epic and many more at every step of the way. this journey. ”
Translation: In the near future, Facebook is happy that Snap keeps trying to sell sunglasses record video and communicate with your phone because those are theoretical competitors Facebook Sunglasses Record video and communicate with your phone. And Facebook will also be happy next year, when Apple is said to launch its virtual reality headset, as it will compete with Facebook’s Oculus headset.
But it’s also hard to imagine that Facebook hopes Apple, Snap, and everyone else will forever be strong competitors. After all, one of the main reasons Zuckerberg was interested in the metaverse was that he imagined it could give him a way to connect directly with his customers without having to depend on Apple and Google phones.
Facebook’s acquisition also highlights the difficulties antitrust regulators face as they grapple with a fast-paced and unpredictable industry. Even the most aggressive antitrust measures we’ve seen over the past few years are designed to go back in time and fix alleged bugs.
Or are they focused on the present, like proposed law that would prevent big platforms like Facebook from making big deals in industries they now dominate.
So how do you look into the future and guess that Facebook – not Google or Epic Games or Roblox or a startup you’ve never heard of – will dominate the metaverse? Especially since the metaverse doesn’t exist, may never exist, or may end up existing in some very different form than Zuckerberg, sci-fi writers, tech executives, and Do investors imagine it could happen today?
I asked the Federal Trade Commission, which is currently suing Facebook over its Instagram and WhatsApp transactions, what they think about Facebook’s ambitions and hyper-reverse purchases, but I didn’t expect to hear back – one partly because the agency doesn’t want to talk about Facebook in its long battle with Facebook, but also because it doesn’t know what it thinks.
It’s worth mentioning here that the government doesn’t necessarily have to win a lawsuit or pass legislation to slow or stop Facebook’s ambitions. Some of the tech investors I spoke to said they believe Facebook is – temporarily, at least – outside the social network-related acquisition market, simply because there is so much oversight and complexity. .
One venture capitalist who sold the company to Facebook in the past said: “It seems like Facebook in particular is going to be very difficult to get anything out of in the social space.
And that could apply not just to big-ticket acquisitions, but even small “acqhires” — low-cost corporate deals made just to bring in engineers and employees. their other on the payroll of Facebook.
Washington has signaled that it wants to pay more attention to small deals: In September, The FTC has released an analysis of the 616 transactions made by Facebook, Google and other major tech companies over the past decade were not large enough to trigger regulatory scrutiny.
But the existence of the report makes it clear that managers think they should look more closely at transactions, not less. FTC Commissioner Rebecca Slaughter elaborated: “I think of mass acquisition as a Pac-Man strategy,” she said when the report was released. “Each single merger viewed independently is unlikely to have a significant impact, but the collective impact of hundreds of smaller acquisitions can lead to monopolistic behavior.”
You could argue about whether Facebook has a monopoly on the social network these days – the company is happy to point to TikTok’s almost overnight success to argue that it doesn’t. But there is no question about its immense wealth and power. The real question: Will we let it use those resources to expand its power in the future?