Facebook Fights Back Against Monopoly Allegations
In the American business world, the government has a fair amount of control in situations that involve monopolies, as they want to keep the free market open to competition. A monopoly would theoretically remove all choice from the consumer, thus allowing companies to raise prices or otherwise take advantage of their customers. If monopolies are illegal, it theoretically helps consumers because they always know they can turn somewhere else. Recently, Facebook and other tech giants like Amazon, Apple and Google have been in the line of fire. Some believe they are too big and fully dominate their respective spaces, making healthy competition impossible.
Mergers
This issue recently made its way into a congressional hearing because of the fact that Facebook bought other tech rivals, such as WhatsApp and Instagram. Some believe that these purchases should never have been allowed in the first place, and there are lawmakers who have asked for them to be undone. It would be a huge blow to Facebook if that was to happen.
According to Facebook, it would also harm the smaller companies that they bought. They claim that they should be allowed to keep them on the grounds that they’re better off working together, actually giving users more choices and allowing the market to expand and develop even more.
“Instagram and WhatsApp have had more opportunity to innovate as part of Facebook than they would have on their own, enhancing users’ experience and resulting in more choice for more people overall, not less,” said the director of public policy for Facebook. “Like most major American companies, Facebook’s acquisitions have played an important role in fueling innovation — both for our own products and services and for the startup community. Acquisitions directly facilitate innovation by bringing together parties’ complementary strengths.”
The issue, and the reason that Facebook finds itself in a congressional hearing in the first place, is that they absolutely control certain aspects of this market in a way that not even other major tech companies have been able to crack. Does that really give the competition a chance? Is Facebook’s tactic just to identify companies that could challenge them and buy them up before they do?
For instance, founder Mark Zuckerberg was asked last year what the top competition was. Many business owners could answer that question easily, but it wasn’t so smooth with Zuckerberg, as he tried to figure out who could challenge Facebook. He ended up saying that people use an average of eight apps every single day while talking to family members and friends.
Critics were quick to point out, however, that he and Facebook may actually own half of those apps. They own Facebook Messenger, the standard app for Facebook and the aforementioned Instagram and WhatsApp. If you look at the social apps people use on their iPhones, the top three are Facebook Messenger, Facebook itself and WhatsApp. Instagram isn’t far behind.
In that sense, Facebook’s defense that they have competition may ring a bit hollow. It’s not competition if it’s just another company that you own under the same umbrella.
A Breakup?
It is hard to imagine that Congress will actually undo the sales of companies like Instagram or break up this alleged monopoly, but it’s very important to see exactly what comes out of these hearings. They have a chance to set a precedent and impact this market for years to come. That can absolutely change the way that business owners use these apps and social media accounts to connect with customers and grow their brands. At Content Customs, we will be here to help you adjust to any potential changes and develop a perfect online marketing strategy.