Ben Thompson Deems Facebook-Instagram Deal 'Regulatory Failure'

Ben Thompson, the founder of well-known tech newsletter Stratechery, deemed Facebook's purchase of Instagram "the greatest regulatory failure of the last ten years." While speaking at the latest iteration of Recode's Code conference held earlier this week, the industry veteran labeled the early 2012 tie-up valued at $1 billion as a traditional horizontal merger that allowed the world's largest social media network on the planet to take out a direct competitor and expand its reach in an unfair manner. Mr. Thompson described Facebook as an aggregator that generally doesn't allow third parties to monetize their content using its technologies, having pointed to that description as the main reason why Facebook should have never been allowed to purchase Instagram.

"A platform is when the economic value of everybody that uses it exceeds the value of the company that creates it," said Mr. Thompson, quoting Microsoft founder Bill Gates while elaborating on his stance. While both Google and Facebook describe their core offerings as platforms, they are generating much higher value for themselves relative to how much their users are able to create, according to the media analyst. The acquisition of Instagram further exacerbated that problem, the industry veteran said. At the time, Instagram's purchase was Facebook's largest to date, having later been surpassed by the takeover of Oculus valued at $2 billion in early 2014 and the $19 billion buyout of WhatsApp which took place around the same time.

Mr. Thompson insists there's no reason for Facebook "to do anything for publishers" other than demonstrating "goodwill," suggesting the Menlo Park, California-based company shouldn't be allowed to conduct any other major acquisitions in the social media space. Some lawmakers in the European Union are already viewing Facebook as a monopoly, having said as much during their Q&A session with the firm's co-founder and Chief Executive Officer Mark Zuckerberg. While the European Parliament already signaled it may attempt breaking up Facebook going forward, it's presently unclear how the legislative body is planning to go about doing so. Mr. Zuckerberg previously insisted the company is in a highly competitive industry, claiming the average mobile user relies on eight communications apps on a daily basis, though around half of that group is likely owned by Facebook itself.

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Dominik Bosnjak

Senior Writer
Dominik started at AndroidHeadlines in 2016. He’s approaching his first full decade in the media industry, with his background being primarily in technology, gaming, and entertainment. These days, his focus is more on the political side of the tech game, as well as data privacy issues, with him looking at both of those through the prism of Android. Contact him at [email protected]