Of the many complaints astir Facebook, 1 comes done consistently: It’s conscionable excessively big. Which is wherefore immoderate critics and regulators privation to marque it smaller by forcing Mark Zuckerberg to unwind large acquisitions, similar Instagram.
Zuckerberg’s response: Let’s get bigger by buying more stuff.
After slowing down concisely successful 2018, the twelvemonth the Cambridge Analytica ungraded erupted, Facebook has been steadily making ample acquisitions — astatine slightest 21 successful the past 3 years, per information work Pitchbook.
Many of the deals person been announced since December 2020, erstwhile the US authorities archetypal filed an antitrust suit against the company, accusing it of maintaining an amerciable monopoly successful societal networking by buying oregon crushing competitors. The archetypal suit and a revised complaint are aimed astatine forcing Facebook to divest itself of some Instagram and WhatsApp.
In the past mates years, Facebook’s appetite for deals has tally the gamut from Giphy, which lets you spot comic GIFs successful your societal media posts, to Kustomer, a concern bundle institution for Facebook’s firm clients. Most of them, though, person been concentrated successful 1 area: gaming and virtual reality. Which makes sense, since Zuckerberg has formally announced that gaming and virtual reality, bundled up successful the expansive and hard-to-define rubric of “the metaverse,” are the aboriginal of Facebook.
Hence the company’s sanction alteration to Meta. But what’s much important is simply a committedness that Facebook volition determination thousands of its employees into the effort, and plans to suffer $10 cardinal connected it this twelvemonth alone, and overmuch much “for the adjacent respective years.”
The time aft Facebook announced the sanction change, the institution illustrated however it volition walk immoderate of that money: a deal to bargain Within, the institution co-founded by VR pioneer Chris Milk, champion known for its Supernatural workout app. People acquainted with the transaction accidental Facebook paid much than $500 cardinal for the company.
Other Metaverse-y deals announced this twelvemonth see Unit 2 Games, which makes a “collaborative crippled instauration platform” called Crayta; Bigbox VR, which makes a fashionable crippled for Facebook’s Oculus VR goggles; and Downpour Interactive, different VR game-maker.
Those deals were already raising eyebrows earlier Facebook formally announced that they represented the aboriginal of the company. So what should we deliberation of them now?
That is: If you deliberation 2021 Facebook needs to beryllium breached up, successful portion to undo deals from the past similar Instagram ($1 billion, 2012) and WhatsApp ($19 billion, 2014), past shouldn’t you besides beryllium disquieted astir deals Zuckerberg is doing present to physique the 2031 mentation of his company?
A Facebook rep was blessed to explicate the quality to me: Unlike societal networking a decennary ago, Facebook isn’t the person successful virtual reality/augmented reality/pick a sanction for it — tons of big, well-capitalized companies are spending a batch of clip and wealth connected it. And, arsenic helium has taken pains to constituent out, Zuckerberg imagines a aboriginal wherever Facebook simply happens to beryllium 1 of respective companies successful the metaverse.
Here’s the on-the-record connection the institution gave Recode explaining the thesis:
“Investing successful and gathering products that consumers privation is the cardinal to success. We cannot physique the metaverse unsocial — collaboration with developers, creators, and experts volition beryllium critical. As we put successful the metaverse, we cognize that we look fierce contention from companies similar Microsoft, Google, Apple, Snap, Sony, Roblox, Epic, and galore others astatine each measurement of this journey.”
Translation: In the adjacent term, Facebook is happy that Snap keeps trying to merchantability sunglasses that instrumentality videos and pass with your telephone due to the fact that those are theoretical competitors to Facebook’s sunglasses that instrumentality videos and pass with your phone. And Facebook volition besides beryllium blessed adjacent year, erstwhile Apple is reportedly going to unveil its virtual world headset, due to the fact that it volition vie with Facebook’s Oculus headsets.
But it’s besides hard to ideate that Facebook hopes Apple, Snap, and everyone other volition beryllium beardown competitors forever. One of the main reasons Zuckerberg is funny successful the metaverse, aft all, is that helium imagines it tin springiness him a mode to link straight with his customers without having to beryllium connected Apple and Google’s telephone duopoly.
Facebook’s acquisition spree besides highlights the trouble antitrust regulators person successful grappling with a fast-moving and unpredictable industry. Even the astir assertive antitrust measures we’ve seen successful the past fewer years are designed to spell backmost successful clip and hole expected errors.
Or they’re focused connected the now, similar a proposed law that would forestall large platforms similar Facebook from making large deals successful industries they currently dominate.
So however bash you look into the aboriginal and conjecture that Facebook — not Google oregon Epic Games oregon Roblox oregon a startup you’ve ne'er heard of — volition extremity up dominating the metaverse? Especially erstwhile the metaverse doesn’t exist, whitethorn ne'er extremity up existing, oregon could extremity up existing successful immoderate signifier precise antithetic than Zuckerberg, subject fabrication writers, and tech execs and investors ideate it mightiness today?
I’ve asked the Federal Trade Commission, the bureau presently suing Facebook implicit its Instagram and WhatsApp deals, what they deliberation of Facebook’s metaverse ambitions and purchases, but I don’t expect to perceive backmost — successful portion due to the fact that the bureau doesn’t privation to speech astir Facebook portion it’s successful a agelong conflict with Facebook, but besides due to the fact that it astir apt doesn’t cognize what it thinks.
Here it’s worthy pointing retired that the authorities doesn’t needfully person to triumph a suit oregon walk a instrumentality to dilatory oregon halt Facebook’s ambitions. Some tech investors I’ve talked to accidental they judge Facebook is — temporarily, astatine slightest — retired of the marketplace for acquisitions related to societal networking, simply due to the fact that there’s excessively overmuch scrutiny and hassle.
“It conscionable feels similar it’s going to beryllium precise hard for Facebook successful peculiar to get thing successful the societal space,” says a task capitalist who has sold companies to Facebook successful the past.
And that whitethorn use not conscionable to big-ticket acquisitions, but adjacent tiny “acqhires” — deals for underwhelming companies made conscionable to bring their engineers and different unit onto the Facebook payroll.
Washington has already signaled that it wants to wage much attraction to tiny deals: In September, the FTC released an analysis of 616 transactions made by Facebook, Google, and different large tech companies implicit the past decennary that weren’t large capable to trigger regulatory oversight.
But the report’s beingness makes it wide regulators deliberation they should beryllium scrutinizing much deals, not less. FTC commissioner Rebecca Slaughter made it adjacent clearer: “I deliberation of serial acquisitions arsenic a Pac-Man strategy,” she said erstwhile the study was released. “Each idiosyncratic merger viewed independently whitethorn not look to person important impact, but the corporate interaction of hundreds of smaller acquisitions tin pb to a monopolistic behavior.”
You tin statement whether Facebook has a monopoly connected societal networking contiguous — the institution is delighted to constituent retired the astir overnight occurrence of TikTok to reason that it doesn’t. But there’s zero question astir its tremendous wealthiness and power. The existent question: Will we fto it usage those resources to widen its powerfulness into the future?