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> For example, when Mr. Zuckerberg met with the founders of startups, including Evan Spiegel, chief executive of Snap, and Dennis Crowley, co-founder of Foursquare Inc., he presented them with two scenarios: either they accept the price he was offering for their companies, or face Facebook’s efforts to copy their products and make operating more difficult, according to people familiar with the conversations. In both cases, after the companies rejected the overtures, Facebook soon after released features that mimicked the products from Snap and Foursquare.

This seems to be a critical bit

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I don’t see the problem with this. Isn’t it fair market competition? Facebook had (and has) deeper pockets and more users, so they won against Snap and Foursquare. Their acquisition of IG and WA were great moves too, it’s almost impossible to escape the Facebook and Google internet.

It's rather easy. Delete your fb and use bing + ddg. Done.

Then you go on your news outlet and meet your friendly facebook "like" button that keep stalking you.

uBlock w/ social filter

Yeah it's quite easy to block social widgets, trackers and the like. A more extreme approach is blocking scripts by default and whitelisting sites you want. Finally don't accept cookies from remote origins, and you're pretty (but not totally) well covered against trackers.

And throw in https://adnauseam.io/ to taint the underlying ad/tracking data.

There are many economists that think the acquisition of IG should have warranted antitrust.

This is a good case on it:

https://scholarship.law.berkeley.edu/cgi/viewcontent.cgi?art...

We don’t even need to go that far. Facebook snooped in users via an advertised VPN app to make WhatsApp and Instagram acquisitions. That in itself should be enough fodder to discuss them.

https://www.wsj.com/articles/facebooks-onavo-gives-social-me...

Instagram was way before Onavo acquisition. WhatsApp was officially announced as an acquisition 4 months after Onavo purchase. The article does say insiders say they used Onavo for WhatsApp purchase decision.

However I’m assuming you don’t do a $19B acquisition (and 10% of your market cap) in a month. Wouldn’t Facebook have already been close to or starting the process of trying to buy WhatsApp before the end of 2013? Onavo was announced as a purchase in mid Oct 2013.

I tried seeing where it stated that. I don’t see it. Instagram was a relatively tiny iPhone app back in 2012. Two years old and 30M users.

I think it's more nuanced, and goes beyond just the content of the quoted excerpt. While copying the features (acceptable market competition), did Facebook leverage/abuse their monopoly status to prevent users from migrating to the upstart with better features? Further, are users being kept on Instagram using better features, or by abusing network effects? If it's the latter, then I would consider that a clear target for antitrust litigation. And preventing users from switching products while you catch-up (or not) seems squarely in that ballpark.

If these features were critical enough that you could found a company on them, then clearly they brought innovation to the scene. If they had not come along, it's unclear as to whether Facebook would have ever introduced those features in their products.

"Fair market competition" is the idea that products compete on their own merits, not that you can leverage your market position to destroy competitors. "Deeper pockets" is certainly antithetical to fair competition even if it's a reality we must sometimes accept. Exploiting the fact that you have "more users" should probably also be looked at as anti-competitive since it certainly doesn't benefit consumers by locking people into exclusive platforms.

Are we really going to resign ourselves to the idea that FAANG will now and forever own nearly all the internet? What good are the "principles" of "free market competition" if we allow consolidation to effectively eliminate the market?

"Fair market competition" is the idea that products compete on their own merits, not that you can leverage your market position to destroy competitors.

This idea implies something akin to an implicit patent on every imaginable product "merit". But I should remind you that patents are not intended to be free market devices - rather, if a patent is granted, it is monopoly given in exchange for an individual describing their honest advancement of the craft. If Snap deserved a patent on their "business process", they could have stopped Facebook, if not, there's no reason that a deep pocketed entity shouldn't look at modest innovations and copy them. The alternative is every small innovation is controlled by a petty dictator, blocking all progress.

I think FAANG is less useful as an abbreviation these days because it includes Netflix. I don’t think Netflix is guilty of much of anything sinister, at least by anyone’s reckoning except certain movie and tv studio executives.

While that’s a good point, if the alternative is going around and using the acronym FAAG I think we can stick with the original.

This is the main reason Netflix is included in the group, I think.

GAFA?

GAFAM is what the french use which includes Microsoft [0].

https://fr.wikipedia.org/wiki/GAFAM

Virtually anybody but Hollywood exec types love Netflix, particularly creatives (the people who actually DO the things). Netflix has been making enormous amounts of content, even for smaller markets like Spain and betting on great people who are making really good shows (see ‘casa de papel’)

If you are a creative person you are enthused about streaming because suddenly there’s a huge amount of content being funded. Think about standup comedy and what Netflix has done for it.

Netflix is run by very smart people who are making very good content that most Hollywood execs wouldn’t touch. Scorcese’s next film is being funded by them! It’s nuts that Wolf of Wall Street, The Departed, multiple Scorsese projects were VERY HARD to fund. Jonah Hill worked essentially for the lowest money you can work for in a movie (SAG which is the actors union says 20k minimum) in Wolf of Wall St. Because they couldn’t afford him. Stuff that you look back and wonder “how the fuck?”

I don't understand why movies like The Wolf of Wall Street would be hard to fund. The talent i.e. DiCaprio, Jonah Hill etc are all great and known actors bound to make a movie succeed, especially DiCaprio. and Scorsese is also a well-known, successful director. Why would producers have any issues funding a movie for them?

Is it the controversial nature i.e. nudity etc that was the problem?

Movies are an insanely risky business if you look past the top blockbusters. And right now the blockbusters are almost purely superhero movies, remakes and reboots, so outside of that it's gonna be hard to get any funding.

Why does this read like an ad? I found Netflix content to be of really poor quality. It is a huge datamining machine that creates content based on the data gathered by it's user. I.e. if a lot of people watch TV series including cats and bank robbery thrilled. They will make a show mixing the two. No risk, no originality. Pure mindless entertainment based on algorithm productivism.

g-mafia

google, microsoft, apple, facebook, ibm, apple

But IBM isn’t that powerful in any direct way any more compared to other tech companies.

Oracle and rising powers like PayPal and Salesforce would make more sense. The latter companies still do a fraction of IBM’s revenue and profit. but they’re growing. I wouldn’t be surprised if their market caps are past IBM by now.

Unless IBM is being included because of the Red Hat acquisition.

Looks like they are included because their name starts with an I.

Microsoft isn't that powerful either. Windows is a small percentage of computing and Office simply isn't a big deal. They're also a pretty good company now.

“Microsoft. Microsoft had a market capitalization of US$ 904.86 billion for the first quarter of 2019, ranking as the largest company in the world. ...”

and that’s just the average. Today they’re a trillion dollar company. That’s 2x Facebook.

And yeah, ibm is included because it makes the mneumonic better.

Yep Microsoft are certainty valuable, they're just not influential. Like IBM or Oracle. Not like Apple, Google or Facebook.

Netflix is also tiny compared to the others. Its entire business is analogous to a single product of Amazon's (Prime video). Not only that but they're reliant on Amazon AWS for hosting.

> Exploiting the fact that you have "more users" should probably also be looked at as anti-competitive since it certainly doesn't benefit consumers by locking people into exclusive platforms.

It's not quite as clear cut as you say. The downsides of being locked into a single platform exist, but the upsides of a new feature benefiting from an existing network also exist. Many consumers have benefited by getting access to ephemeral messages with their existing friends, when they wouldn't have installed a separate app and nagged their friends to switch just to get that feature.

Do you really think Facebook rolled out Stories specifically to kill Snapchat? That may have been a side effect that Facebook wouldn't care about, but they rolled out Stories because they were a good feature that could increase the value of Facebook.

Does having deeper pockets mean you aren't allowed to learn from competitors who do something better than you do? Should Snapchat not be allowed to have a social graph because Facebook has one? It really seems like those who think stories was just "copying to kill Snapchat" actually think something like the former, but not the latter, despite the logic being identical.

It may be competition, but it certainly isn't fair competition. As you note, Facebook has much deeper pockets than even a well-funded startup. They can afford to build a clone of your product and give it away for free, without any expectation of even future revenue, specifically to drive you out of business. And they can bundle their clone with their already-popular apps, so people never even feel the need to check out your original product since they have a "good enough" version placed right at their doorstep.

This is the exact same playbook that Microsoft used to strangle many, many promising companies back in the '80s and '90s: Stac Electronics (https://en.wikipedia.org/wiki/Stac_Electronics), WordPerfect, Netscape, the list goes on and on. It's just impossible to successfully compete with someone who has an endless supply of money and can stand as a gatekeeper between you and your potential customers.

Would we prefer a world where disk compression, document editors, and web browsers weren't available as free apps?

There seems to be a fine line between price-dumping that ends up hurting consumers once competitors are driven out of business, and aggressive competition that benefits consumers by driving down prices and increasing availability.

Efficient markets have never been about absolute fairness. There's no industry that has been built without the attempted participation of deep pocketed enterprises from earlier, related industries - adding machine companies (like IBM) naturally wanted to jump into computers.

The system we live under is capitalism. It's aims are to provide profits to those who invest their existing wealth in innovations. If those with wealth can't use it to gain more wealth, they have no incentive to use it.

The government steps in when a given enterprise meets the definition of monopoly - IE, actually prevent new entries into a field (Microsoft met this definition). Google and Facebook are unpopular but I'd say it's pretty clear they don't meet the definition of monopolies preventing entry into their industry (at least on the net, Android is another matter).

I don't get why people play devil's advocate in defense of scummy behavior by tech companies. Every shitty thing they do should be called out, exposed and condemned. If they know they don't have public support or defenders they will be better behaved.

I don't get why people play devil's advocate in defense of scummy behavior by tech companies.

"Scummy behavior" is dumping poison in rivers or working people 90 hours a week. Normal competition is large companies putting smaller companies out of business through greater leverage. I don't care about a random small company getting rewarded for its random innovations. Why should I? The smaller company would probably crush an even small company given the opportunity. Large companies can sometimes offer more health benefits and such and smaller companies work 90 hour weeks more often.

If you want a different social system or something, good for you. If we're talking the present system, weeping for the operations of the market is waste of time. Regulate actual bad behavior, sure. But otherwise, save all regulatory effort, I'd suggest.

    > ...I don't care about a random small company getting rewarded for its random innovations. Why should I?

Actually, the 800 lb gorilla companies DO CARE about random small companies and their random innovations. That's why they try to buy them, sometimes aggressively. Quite frankly, it's how larger companies can get innovation.

As a company grows, true innovation usually gets squelched in favor of derpy project management bullshit. Creative people get burned out and leave, or, in some cases become "a fellow". The main way these big companies can actually innovate is to buy these smaller companies. It might be good for the owners of the small company, some folks cash-out, some get new jobs, some aren't so lucky. Whatever happens a bunch of folks got some great experiences and the satisfaction of creating something new.

I don't see this stuff as a bad thing-- and especially not for social media stuff.

"Actually, the 800 lb gorilla companies DO CARE about random small companies and their random innovations. That's why they try to buy them, sometimes aggressively. Quite frankly, it's how larger companies can get innovation."

Yes, the market takes care of this so I don't have to care.

The role of the citizen is caring about situations where markets malfunction - true monopolies, externalities, and all that jazz.

It's also the exact same playbook Google used against Facebook with Google+.

Except both companies had deep pockets in this scenario.

Facebook was further along than Snapchat, but there was still a 10x disparity in headcount and market cap. This was before Facebook had IPO'd.

Google had around 1,000 engineers dedicated to Google+, plus the entire company had KPIs based on the success of the project. Facebook had less than 1,000 engineers in total.

Facebook was nowhere near where it is today. It doesn’t even make money the same way with the majority of revenue and profits coming from mobile, with IG being a bigger and bigger factor. And it’s much more international (and monetizing international) now. Google was the giant when they tried Google+.

Before google+ launched Facebook had over 750 million users. It was hardly a small fish.

In either case, though, using market supremecy to crush competition should not be rewarded.

During that time period FB’s growth was meteoric and unprecedented. That’s the only reason Google likely took so long as to launch when FB is at 800M users. Because at beginning of decade they were at half that. Go back to beginning of 2009 and they are close to a third from beginning of decade.

They weren’t small in terms of users. But they were small in that just a few years prior, their user amounts were a fraction of what they were during Google+‘s launch. With Friendster, Mysapce, and all the me too social networks losing, there was no way to know for sure Facebook would win out and last as a huge company in the early 00s.

In early 00s, their revenue and profits hadn’t caught up to user growth either. The mobile explosion hadn’t fully happened yet. As well as Instagram now being a key part of their growth and solid part of their revenue and profit.

For one, pretty much every example cited in the article are "clones" of products that the "aggrieved" party was also giving away for free. But let's ignore that.

Let's take Stories. Facebook has monetized them, and pretty clearly realized they could monetize them when they rolled out. Does the fact that Snapchat came up with them mean Facebook should not be able to launch something that they plan to monetize? By this logic, anything Facebook rolls out that someone else did first wouldn't be allowed.

It's fairly easy to escape Facebook and Google in the grand scheme of things. A lot easier than avoiding, say, Nestlé or Coca Cola IRL. It's easier to change your homepage than your dietary habits. The problem is convincing people that they need to switch, clearly the vast majority doesn't care enough to download Firefox or make two click in their settings to change the default search engine.

I dont use foursquare but I dont think they won there. There data is being used all over the place -no?

> Isn’t it fair market competition?

Exploiting a monopoly in one segment in order to capture another is text book unfair competition.

I mean, they're competing social networks.

Exactly, that's illegal under US anti-trust law. It's called product tying.

It's legal to achieve a monopoly by competitive means, via pure excellence in product and operations. But it's illegal to then attempt to achieve another monopoly in a different product by tying it to your legal monopoly product.

That was part of the US DoJ suit against Microsoft in the 90s.

Agreed. Facebook came out with the Newsfeed, and now nearly every social product has a newsfeed: MyFitnessPal, Twitter, Venmo, etc.

It is until it isn’t. That came when Facebook deliberately targeted these young with policies whose obvious intent is to choke the growth of competitors before they attain critical mass. For example, policies which penalized content producers if they linked to Snapchat accounts.

I kind of agree with you. More specifically, to your example, would Snapchat, Whatsapp, etc, have been served well in this case by specifically patenting their implementations of specific features?

Like Facebook just totally ripped off Tinder with their new Dating feature -- could Match have just patented the profile with heart/pass buttons and then have grounds to sue?

It's anti-competitive behavior. There's no such thing as a fair market when one player has a monopoly.

I'm actually not in favor of anti-trust law and breaking up large companies. We should just properly tax them so that they can't grow this large.

Fair market competition is not possible if one actor is in a monopoly position.

And I am curious to read what economic theory says about competition over a free product. I mean, I understand their revenues come from advertisers, but they are trying to get users, for free, like if it were a market competition. I wonder how much this model holds water in that case.

Fair market competition is dead. It has been for a long time. Companies use every trick in the book to gain advantage, ethics be damned. Fair market competition was the first casualty of Neoliberalism when companies took greed is good to their heart and focused only on increasing shareholder wealth. Ayn Rand must be spinning in her grave now.

Just thought I'd post a supporting post to contrast the posts saying the move is unfair.

Imagine that Facebook wanted to have that functionality. They offer to buy the companies involved, but the companies ask for an unfair price ("1 million dollars!"). Should Facebook be compelled to pay that price? If they do not wish to pay that price, should they be forbidden from entering the market? Should Snap or Foursquare have a monopoly against any competitor that might be able to out compete them?

We can say that Facebook has a monopoly, but does that mean they should be forbidden from entering any new (to them) markets? We can say that they have a lot more money than their competition. Does that mean that they should be forbidden from competing? I don't think any of that makes sense.

I think what people are concerned about is the idea that Facebook will abuse their market position to compete unfairly. I think it's reasonable to fear that, but I don't think you can shut them down a priori. We don't have thought police yet. You can't be punished for something you haven't done yet.

If the argument is that Facebook should be punished for their past actions and forbidden from entering new markets, that's an argument that at least makes sense (I'm not sure I agree with it, though). I just can't understand any argument that says that lacking such a punishment, Facebook has to refrain from entering markets that they didn't create.

If we had such a mechanism in place, I think the potential for serious abuse would far exceed what Facebook has done to this point. In fact, I think we would be encouraging companies that act even more irresponsibly than the bad actors we have now in the market place. I can't really see an upside.

This is implicit in almost every acquisition though.

It's one of the first things any investor will ask you which is how you can you defend your product from duplication by a larger company. If you are a company that overly relies on a single feature e.g. Snap stories then of course you will be more sensitive to threats like Facebook presented.

Steve Jobs made a similar offer to Dropbox.

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