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Facebook’s recent F8 event revealed a sneak behind the curtain at what the platform is currently working on, with a few surprises clearly still left up the social media giant’s sleeve. But as Facebook further encroaches upon the turf of its Silicon Valley neighbours, should we be concerned about the lack of competition?

 

When it comes to living in a capitalist society, there’s one freedom we’ve all become used to having: the freedom to choose. Thanks to laws around competition, you’ll always find different options available within the marketplace – you don’t have to get your clothes from just one shop, we’re not limited to one television programme, and retailers can take solace in the fact that competition allows them to exist.

shopping

In recent years, however, we’ve seen a worrying trend in the digital landscape, whereby social media giants are slowly but surely hoovering up small start-ups and their technologies in order to expand their own offering; in the process, the rates of competition are dropping. What makes this so concerning is that such activity seems to go largely unchallenged.

 

Challenging Lack of Competition

If we momentarily move our gaze to other industries, such as retail or entertainment, we can see that competition watchdogs have proactively taken issue with large mergers in the past. The acquisitions of Marvel and Lucasfilm by Disney in the not-too-distant past have not been without their challenges.

disney logo

The most current minefield for the House of Mouse to navigate is the complex, often bewildering takeover of Fox. Stepping into the fray, consumer watchdogs and competition analysts have warned Disney that the merger could have a profound effect on consumers – not least as this is Disney’s attempt to stock up on content ahead of the launch of its own streaming platform to compete with Netflix.

In the UK specifically, competition watchdogs have made it clear to Disney that should Fox’s attempt to buy Sky UK fail, Disney itself would have to buy 100% of the company’s shares, potentially adding yet another, sizeable feather to the entertainment giant’s cap.

Meanwhile, the recent news of a merger between Sainsbury’s and Asda has made a stir, with Sainsbury’s boss allegedly (yet unsurprisingly) caught singing “we’re in the money” to himself. As lucrative as this merger may be, it’s also facing a potential anti-competition probe, with an initial 40-day investigation taking place to measure the risk such a decision would have on a fair market.

 

Facebook’s Growing Kingdom

Across the Pond in Silicon Valley, Facebook seems to be taking a leaf out of Disney’s book. The social media platform, which started as a database of college students on campus, now encompasses many different service offerings. Users can now experience different features which were initially available elsewhere (such as on Snapchat or Instagram) all on one app. In recent months and years, users have become used to being able to post Stories to their account, or send payments through the Messenger app – itself a former competitor of WhatsApp and MSN.

phone apps facebook

It’s not just through inspiration which Facebook has managed to build its new empire either: strategic acquisitions have seen virtual reality arrive on the platform (Oculus), end-to-end encrypted messaging (WhatsApp), and influencer marketing rich photo-sharing (Instagram). The current list of Facebook acquisitions already reaches 67 at a huge cost, with many of the names included providing an insight into where the platform might go next.

 

Killing the Competition

More recently, at the F8 conference, Facebook announced another new feature which could give the competition a run for its money: a dating service. The as-of-yet unnamed service is sure to bring the ire of Tinder, OKCupid, Match and POF thanks to Facebook’s superior database of individuals – it does, after all, have over 200 million ‘single’ users, according to Mr Zuckerberg.

online dating

Unfortunately, this presents two problems: firstly, it raises further questions around how personal data will be used at a time when trust in Facebook is low – a worrying prospect for its users. Secondly, competitors will be well-aware of Facebook becoming a singular hub, eclipsing their services with its own – and with an unrivalled database, they will be hard-pressed to put up a fight.

Facebook’s imperial ambitions aren’t a new story, however: it’s one that has been building to a climax ever since the company made its first acquisition in 2005. As one brand grows and offers more services to its users, other apps and brands find themselves bought out, forgotten about, or folding.

 

Has Facebook Grown Too Big to Govern?

Apart from some bad press, many users will be unaware of Facebook receiving much backlash for its anti-competition activities beyond their own annoyed remarks around the platform ‘copying’ features from someone else.

That’s not to say, however, that Facebook hasn’t been brought to task before. In 2017 – three years after its merger with messaging platform WhatsApp – Facebook was fined €110million by the EU for ‘misleading’ the European Commission during a competition review. Despite the fine – surely spare change from Facebook’s lucrative coffers – the Commission admitted that the misdirect did not change the outcome of the review, meaning Facebook wasn’t penalised for anti-competition.

whatsapp

In comments made at the start of April 2018, French president Emmanuel Macron warned that Facebook – like Google – would soon become “too big to be governed”. Although tech giants are welcome in France for their jobs and for being part of the eco-system, the president made it clear that dismantling might be the best option at a time when competition is an issue.

Should Facebook continue to expand its services, mergers and acquisitions, we may reach Macron’s reality sooner than expected. To Zuckerberg’s credit, however, the Facebook boss is open to government regulation. But with the platform continuing to grow and become ingrained in our lives – as a platform for free speech, an information resource, and a source of entertainment – such action needs to be taken soon if we’re to keep competition alive.

 

If not, would we be losing our freedom to choose altogether?

 

Kaleida is a bespoke software development house based in Manchester. We work with clients in a number of industries to create tailor-made solutions to unique problems. To find out more about work, feel free to explore our case studies page, or get in touch with us directly.

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