Facebook Breakup Would Demolish Zuckerberg's Social Media Empire
Comment of the Day

December 11 2020

Commentary by Eoin Treacy

Facebook Breakup Would Demolish Zuckerberg's Social Media Empire

This article from Bloomberg may be of interest to subscribers. Here is a section:

“Breakups are scary for investors because in some ways they could disrupt the business models,” said Dan Ives, an analyst at Wedbush Securities who called Instagram one of the three best business acquisitions of the past 15 years. Still, Ives thinks the chance of an actual breakup is “slim” without legislative changes from Congress, which he believes are unlikely. “It’s a noisy headline but it doesn’t massively change the situation for Facebook in the near term.”

However remote the prospects, any sign that the FTC is leaning toward a breakup is likely to weigh further on Facebook’s stock. Facebook acquired these promising rival platforms precisely
because it expected the main social network to one day fade, and it wanted to be the company deciding what apps people would turn to next. A breakup would undo most of Zuckerberg’s hedging for
Facebook’s future, just as his immense investments in Instagram and WhatsApp are starting to pay off. Facebook argues that those investments made Instagram and WhatsApp what they are today.

“Our acquisitions of Instagram and WhatsApp have dramatically improved those services and helped them reach many more people,” Zuckerberg wrote in a post to employees on Wednesday. “We compete hard and we compete fairly. I’m proud of that.”

Eoin Treacy's view

Breaking up Facebook is a monumental challenge which could take years, if it happens at all. However, the constant haranguing of the company by politicians is likely to limit its ability to grow. It will be unable to acquire future up and coming social media platforms to appeal to younger demographics. Musical.ly, which was acquired by TikTok, is an example of how Facebook has already been limited in continuing to buy competitors.

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