Changing The Rules To Control Monopolies Could See The End Of Facebook Domination

No one raised an eyebrow when Mark Zuckerberg bought tiny Instagram in 2012 for US$1 billion. Now regulators want to unwind the deal, by forcing Facebook to sell Instagram, and WhatsApp. This move may spell the disintegration of the Facebook empire.

But this is not only about Facebook (FB), or Amazon (AMZN), Google (GOOGL), and Apple (AAPL). It is a global shift of the boundaries within which monopolies can function.

The US Justice Department recently blocked Visa (V) from buying Plaid, which provides payment processes and works in a similar way to Stripe. Plaid provides the plumbing that lets apps like Venmo, a cash transfer service, or Robinhood, a stock trading platform, access user bank accounts.

Today, Plaid acts as a link between fintech apps and some 11,000 financial institutions. Visa and Mastercard aid in electronic funds transfers between bank accounts but Plaid can take out these middle men. One day, consumers might make purchases without a debit or credit card, paying merchants directly from their bank accounts. That’s why Visa wants Plaid – it can’t afford to miss the next big thing. As the late Intel CEO, Andy Grove said, only the paranoid survive.

Regulators worry that an acquisition could “deprive American merchants and consumers of this innovative alternative to Visa”. This change in attitude indicates that companies may no longer be able to simply buy out their competition. Many regulators globally have broadened their field of view, and “consumer welfare” has a wider scope. Regulation seems to indicate that pricing is no longer the only consideration - there has been a shift towards protecting a competitive marketplace.

Cornering the market

Datasets become exponentially more valuable when you combine them. When Google introduced Gmail, it built a new dataset of people’s identities. In addition to the existing search engine dataset, Google then also had people’s email addresses and IPs. As a result, Google’s AdWords can now provide more refined targeting for advertisers.

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Disclosure: This article is republished from The Conversation under a Creative Commons license.

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