Facebook Breakup Would Be Difficult If Services Are Integrated – FTC

FTC Chairman Joe Simons has admitted that Facebook’s plan to integrate Instagram and WhatsApp more closely could hinder regulator attempts to break up the social networking giant.

Last week Simons had said he was prepared to break up major technology platforms if necessary by undoing their past mergers.

Simons is leading a broad review of the technology sector, and he told Bloomberg at the time that while breaking up a company is challenging, it could be the right remedy to rein in dominant companies and restore competition.

Facebook integration

It is well known that Facebook plans to integrate the back end of its popular messaging services (WhatsApp, Messenger and Instagram), and this could be a trial of integrated messaging across all its services.

Facebook is also rumoured to be considering ditching the Messenger app altogether, and instead reincorporate Messenger chats back into the main Facebook app.

The integration plans, which were first reported in late January, are controversial because they would tighten Facebook’s control over the services’ previously independent operations, raising further questions around security, competition and data protection.

Facebook aims to complete this messaging integration in late 2019 or early 2020.

But this development has not gone unnoticed by the US Federal Trade Commission (FTC) and its boss.

Difficult breakup

Chairman Simons told the Financial Times on Monday that those integration plans could make it more difficult to breakup the social network if that action is decided. He has already described tech breakups as a messy, but sometimes necessary option.

Simons told the FT that all options were on the table as the FTC investigates Facebook for potential antitrust violations, and added that any attempt to combine its three major brands could complicate any case.

“If they’re maintaining separate business structures and infrastructure, it’s much easier to have a divestiture in that circumstance than in where they’re completely enmeshed and all the eggs are scrambled,” Simons told the FT.

Facebook acquired Instagram for $1 billion (£760m) in 2012; and it also acquired WhatsApp in 2014 for a staggering $22 billion, despite the fact that WhatsApp at the time had a tiny revenue stream.

Critics and antitrust lawyers say that big name tech firms use acquisitions to shut down competition and ensure their domination.

In May this year Facebook co-founder Chris Hughes called for the firm he helped create to be broken up as it has become (in his view) too powerful.

The FTC last month said that Facebook would have to pay a record $5bn fine.

Along with the record fine, Facebook will also have to submit to new restrictions and a modified corporate structure, after ‘repeated violations’ of its 2012 agreement with the FTC.

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