In brief: Zuckerberg’s latest argument about Facebook’s controversial acquisitions is that Instagram achieved its remarkable success because the parent company poured its resources in to make it happen. However, we’ll have to wait and see if regulators agree with his assessment.
Facebook CEO Mark Zuckerberg recently held an investors call where he tried to push back against critics and lawmakers who believe the company’s big ticket acquisitions have been a threat to competition in the social media space. And while it shouldn’t be a surprise, Facebook has posted impressive financial results for the latest quarter, sending shares soaring once again.
The executive argues that at the time of the 2012 deal, there was no guarantee that Instagram would grow to foster the attention of over one billion users every single month. He noted that Facebook didn’t see it as a “true competitor,” as it was one of many other companies operating in the social media space and only had a relatively small, 30 million user base.
According to Zuckerberg, the FTC was well aware of these details when it greenlighted the Instagram acquisition. He noted “I set a goal that we hoped that one day Instagram might reach 100 million people, and I know that that seems quaint today compared to how well it’s done, but remember that a lot of the other services that were Instagram peers and were growing quickly at the time.”
To put things in context, Zuckerberg argues that companies like Tumblr, Twitter and Snap that struggle to make a profit are healthy competition for Facebook. Or he may be referring to Google+, which proved unsuccesful despite the search giants’ efforts to scale it up. It can, however, be argued that YouTube is also a competitor, but it faces financial challenges of its own. Chinese social giants like WeChat, Weibo, and QQ don’t even compete with Facebook, which is blocked in the country.
But if there’s any indication that the company is about to be battered by regulators for using anticompetitive practices to achieve its dominance, look no further than the exodus of partners from one of its most ambitious project yet: Libra, a global cryptocurrency that looks increasingly unlikely to launch as planned.
Meanwhile, Facebook has been unifying the underlying infrastructure of its social media and messaging properties, Instagram included. Zuckerberg said during internal meetings he is prepared to fight regulators who want to break up the company into smaller pieces. So far he’s had a “constructive meeting” with Trump with respect to internet regulation, but he’ll have a much harder time convincing lawmakers that Facebook’s acquisition of Instagram is not an antitrust issue.
Investors don’t seem to be too concerned with Facebook’s antitrust battles, however. When the FTC hit the company with a $5 billion fine for its privacy mishaps, its valuation shot up by $10 billion. In the meantime, Congress is asking Facebook and other tech giants many questions about how they reached their dominant positions in their respective markets, in a broad antitrust probe that could get ugly in the near future.