Facebook CEO Mark Zuckerberg is speaking at an event on January 15, 2012 at Facebook’s head office in Menlo Park, California.
Josh Adelson | AFP | Getty Images
In a group report released Tuesday, the House Judiciary Subcommittee on No Confidence has ruled that Facebook has a monopoly on the social network and has retained its position by acquiring, copying or killing its competitors.
In a report by the Democratic majority staff, which also addresses distrust concerns regarding Amazon, Apple Pal, Google parent-company Alphabet, Congress recommends reviewing a range of possible solutions. This includes “structural isolation”, which companies may need to share parts of their business. For example, Facebook may be forced to divest the photo-sharing service Instagram and the messaging application WhatsApp, or to separate operationally, which has got them both.
The report also recommends that Congress consider any acquisition by large technology companies to be contradictory, unless the companies can prove that the merger is in the public interest and can be achieved otherwise.
Exclusive to Facebook, the report concludes that “the power of Facebook’s monopoly is firmly entrenched and is unlikely to diminish due to competitive pressures from new entrants or existing companies.” Due to being trapped as a monopoly.
In particular, the report noted that Facebook would further its monopoly by identifying and capturing competitors who could pose a risk to the company, by copying or killing them. An example of this is the 2012 exchange between Zuckerberg and his chief financial officer over a 1 billion Instagram acquisition.
“One way to look at this is that time is what we’re really buying,” Zuckerberg said in the report. “Then even if some new competitors go ahead, buy Instagram right now … before anyone can get close to their standard again, giving us a year or more to consolidate their dynamics.”
“Facebook is an American success story,” a company spokesman told CNBC.
“We compete with a wide variety of services using millions, if not billions, of people,” a Facebook spokesperson said in a statement. “Acquisitions are a part of every industry, and we’re exploring new technologies to deliver more value to the people. Instagram and WhatsApp have reached new heights of success as Facebook has invested billions in that business. A strong competitive landscape at the time. Existed. Both acquisitions and exist today. Regulators thoroughly reviewed each transaction and saw no reason to stop them at that time. “
See also:
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Concerns about steady growth on the core Facebook app
The findings included a 2018 insider company document called Cunningham Memo, in which Facebook senior data scientist Thomas Cunningham informed CEO Mark Zuckerberg and Growth vice president Javier Olivan that Instagram could be a “tipping point”. All users leaving Facebook’s blue app.
“The question was how we position Facebook and Instagram not to compete with each other,” a senior Instagram employee told the subcommittee (the report does not name this person). “It was a collaboration, but under an internal monopoly. If you have two social media utilities, they shouldn’t be allowed to overlap. It’s unclear to me why this shouldn’t be illegal.”
The Cunningham memo notes that “there are issues in social applications that ‘either everyone uses it, or no one uses it.’
Another former employee told the subcommittee that the only thing people do on Facebook is to use the company’s services for only a minute longer.
The former employee told the subcommittee, “Your only job is to get an extra minute.” “It’s unethical. They don’t ask where it comes from. They can monetize one minute of activity at a certain rate. So the only metric is getting another minute.”
The veil was laid
In negotiations for the deal, the report also noted the exchange of messages between Zuckerberg and Instagram co-founder Kevin Systrom. As Zuckerberg describes the exchange in the report, suggests that “the refusal to enter into a partnership with Facebook, including the acquisition, will have its consequences on Instagram.”
The report quoted Zuckerberg as saying:
“Soon, you’ll need to figure out how you really want to work with us. Through a ga relationship with this open graph, a hand length relationship using our traditional API, or maybe not at all … of course, it At the same time we’re developing our own photo strategy, so how we engage now will determine how we do it against partners, competitors, down the line – and I want to make sure we do that thoughtfully as well. “
According to the report, Zuckerberg made similar comments to product teams related to the growth of Facebook and WhatsApp. WhatsApp posed a threat to the company’s messenger service and Facebook in 2014. Bought WhatsApp for બ 19 billion.
According to the report:
“Regarding the marketing strategy for Messenger to compete with WhatsApp, Mr. Zuckerberg told the company’s growth and product management teams that ‘how you create brand and network effect is the first.’ He also told them that Facebook has an “opportunity to do this on a scale, but that opportunity will not last forever. I doubt we have WhatsApp even a year ago to move in this direction.”
More users, more data
The report also cites Facebook’s advantage in being able to collect data from its vast userbase, far more than any social networking competitor.
The report notes that this data benefit is twofold. With more than 3 billion monthly users, Facebook has more access to data than its competitors. Facebook uses that data to create a more targeted experience for each user, which in turn attracts more users and causes them to spend more time on the company’s services, the report said.
“Facebook’s data advantage grows over time, cementing Facebook’s market position and making it more difficult for new platforms to provide a competitive user experience,” the report said.
The report suggests that inter-efficiency between competing services may help curb the benefits of these data advantages. For example, this may include the requirement that one company’s messaging application be able to send messages to another company.
“International efficiency breaks the power of network effects by giving new influencers the benefit of existing network effects, not at the company level, but at the market level,” the report said. As a result of switching users spend by making sure they do not lose the loss of their network. ”
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