In order to avoid attracting more attention from regulators and lawmakers, Facebook reportedly decided against buying a competing platform. In recent times, there have already been talks of breaking the company up, and another addition to its portfolio could have exacerbated the situation and resulted in another merger.
It appears that younger people are not as attracted to Facebook as the company would like, which is perhaps the reason why it wanted to acquire the video chat app Houseparty. The mobile app allows multiple users to live stream at the same time and is popular among the under-24 audience. It was co-founded by two Silicon Valley entrepreneurs named Ben Rubin and Sima Sistani in 2016.
For a social media giant that’s bleeding young users, the takeover probably made business sense. Facebook has always been serious about staving off competition from budding apps. It even wanted to acquire Snapchat back in 2013 but the offer was turned down CEO Evan Spiegel. Needless to say, Houseparty was probably deemed a threat by Facebook. In fact, the company was planning to launch a similar app called Bonfire in 2017 but the project was abandoned.
Facebook executives were apparently in advanced stages of discussion to buy the app last December but did not proceed as they feared that the decision will invite more antitrust scrutiny from the federal government. Later on, Epic Games, the company behind Fortnite, bought Houseparty for an undisclosed amount.
Facebook is considered a monopoly by some lawmakers and critics as they believe that the company has curbed competition and gained too much power by purchasing Instagram and WhatsApp. The company bought Instagram in 2012 and WhatsApp in 2014. Senator Elizabeth Warren says that if she is elected president, she will break up the social media company, as well as other giants such as Amazon and Google.
The Federal Trade Commission is currently investigating the social networking company due to concerns regarding antitrust practices. Facebook has also received flak for its lax attitude towards privacy and the FTC has also fined it $5 billion for the same. The Department of Justice has also opened an antitrust investigation into the company.
Presumably, to avoid being broken up, Facebook is planning to merge the Facebook Messenger, Instagram, and WhatsApp. Moreover, it also apparently plans to rebrand Instagram and WhatsApp so that it becomes clear that the apps come from Facebook.
Currently, the apps operate independently of each other but once they are woven together, Facebook will be able to make a case against their separation. Instagram and WhatsApp contribute heavily to the revenue of Facebook and Mark Zuckerberg would obviously not want to lose them.
However, the company has been called out for this interoperability project. For instance, the chairman of the House antitrust subcommittee, Representative David Cicilline says that the combination of Facebook, WhatsApp, and Instagram into one communication platform is just an attempt by the company to evade antitrust enforcement. Facebook has denied these accusations, with the head of product for messaging Stan Chudnovsky saying that these changes will be beneficial for users.