War against Apple! Facebook’s dumbest or smartest move?

About this blog!

Dark Light

Mark Zuckerberg in most recent Facebook earnings call declared Apple as one of their biggest competitors. If Steve Jobs was still alive you may have seen a statement like: “I’ve made my life’s mission to bring Facebook to the ground.” as he expressed similar views about Android back in 2011. Thankfully our boy Tim Cook has sane approach towards such issues. In his latest keynote speech he said: “In terms of privacy — I think it is one of the top issues of the century,” “We’ve got climate change — that is huge. We’ve got privacy — that is huge.”

How Apple & Google indirectly helped Facebook grow from $15B to $200B in 5 years (2009–14)

Created by: Gustaf Alstromer

Back in 2007 people at Facebook thought they’ve hit the limit and probably they won’t grow past 400 million users. But guess what? one new feature brought in another 100 million users! No, it wasn’t the ‘like button or newsfeed’ it was ‘translations’. The ability to translate Facebook to 100s of different languages resulted in 25% user growth in about two years.

2009 was difficult time for Facebook, once again they thought they’ve hit the limit and there was immense pressure on the leadership to generate revenue. Their growth team was worried they may not reach 600 million users by 2014. But they reached 1.25 billion by 2014, how? Well, they should thank Steve Jobs for that. Apple introduced App Store in 2008, followed by Google Market(later named as Play Store) same year. Like most other companies it took Facebook a while to understand the true potential of mobile apps, but as they did they shifted their prime focus from browser to apps. Thanks to Apple & Google, Facebook grew its user base from 600 million to 1.25 billion and market cap a massive 1330% in just 5 years.

Why is Facebook playing the victim?

Ever watched a mouse play dead when approached by a cat? That’s exactly how large enterprises react when called a monopoly. Why? because monopolies aren’t politically salable. That’s one of the reasons why these companies keep diversifying into perfectly competitive markets to look competitive. Now why would Google want you to think they’re a search engine monopoly? or Facebook want you to think they’re social media monopoly? They don’t! So, they keep funnelling some of their resources into side projects just to give out an impression that they’re trying really hard to keep up with the competiton. Google’s Pixel and Facebook’s Portal are two of the many such examples. 

“There are only two kinds of businesses in the world, the businesses that are perfectly competitive and the businesses that are monopolies.” – Peter Thiel

You may think why would Facebook want to play dead all of a sudden? The answer is the ‘antitrust case’. Antitrust case is a legal action brought against companies that are somehow limiting free competition in the market. What would you do if you are the chairman of Facebook and the court orders you to break the monopoly by either cutting off WhatsApp or Instagram? Your answer will define your future in the business world. 

No business ever wants to be regulated by the government so what’s the next step for Facebook? Make up a temporary competitor who is much bigger than you and play victim? That’s what Facebook just did, Mark Zuckerberg went straight after Apple’s iMessage app calling it WhatsApp’s biggest rival in the US and said: “Apple has every incentive to use their dominant platform position to interfere with how our apps and other apps work, which they regularly do,” he said. “They say they are doing this to help people, but the moves clearly track their competitive interests.”

Apple’s new privacy features did put digital advertising companies like Google & Facebook out of their comfort zones but did Google declare a war against Apple? No, because they’re competing Apple with Android and they understand user privacy is becoming a very sensitive subject and they may have to follow Apple’s lead on this one.

Then why is Facebook so pissed off about it? Because this might be a great opportunity for them to get out of the antitrust case in one piece. The antitrust case was filled against 3 tech giants: Amazon, Google & Facebook. And clearly Facebook has the most to loose as they have been in hot waters since 2016 US elections, followed by the ‘Cambridge Analytica’ fiasco and now the new ‘WhatsApp’ privacy policy. Those of you who think this case is too small of a deal for Facebook must keep in mind that people thought the same about antitrust lawsuit against AT&T which broke the company up in 1982.

In my opinion Facebook going head to head with Apple will hurt them in the short run but, it will help them a lot with antitrust case. If they lobby enough support from the industry they can file a much stronger antitrust lawsuit against Apple. And as Apple has been gradually increasing its focus on the services business which includes Apple’s streaming services, iCloud subscriptions & App Store. A well prepared antitrust case might create some trouble for Apple but, it’ll have to be an order of magnitude better than Facebook’s recent attempts of newspaper ads.

Leave a Reply

Your email address will not be published.