Corporate confusion: Is Facebook getting it right

The Facebook’s share is about 20 percent of the United States online ad market. This may be true for the online ad market overall, but in terms of social spend, Facebook has 80% market share. Marketers typically allocate budgets by category such as search or social and then pick platforms within those categories (though, to be fair, budgets do respond somewhat to relative changes in cost structure between spend categories).

Still, with Facebook’s (and especially its subsidiary Instagram’s) dominance in the social market, it’s hard to say it has any real competitors right now. Competition has led it to innovate in order to maintain competitive as formats, but it’s inventory is unmatched and unmatchable. Even if a competitor provided substantially better ads, it would be difficult for it to provide the demanded inventory when new users are limited due to network effects.

The misunderstanding is about Facebook itself and the competitive dynamics in which they operate. They are a large company made up of many smaller pieces. All of these products and services fight for customers. Each one has at least three or four competitors with hundreds of millions, if not billions, of users. In photo and video-sharing, they compete against services like YouTube, Snapchat, Twitter, Pinterest and TikTok, an emerging competitor.

In messaging, they are not even the leader in the top three markets — China, Japan and, by our estimate, the United States — where they compete with Apple’s iMessage, WeChat, Line and Microsoft’s Skype. Globally, the context in which social media must be understood, China alone has several large social media companies, including powerhouses like Tencent and Sina. It will seem perverse to people in Europe, and certainly in China, to see American policymakers talking about dismantling one of America’s biggest global players.

Its irritating that all these righteous progs were worshipping FB only a few years ago, heedless of it dominance and obvious privacy issues, which is one reason it became so dominant in the first place. Now in their pique at their own foolishness, they want to destroy it.

In this competitive environment, it is hard to sustain the claim that Facebook is a monopoly. Almost all of their revenue comes from digital advertising, and most estimates say Facebook’s share is about 20 percent of the United States online ad market, which means 80 percent of all digital ads happen off  Facebook platforms.

Just getting Facebook to act in way to avoid calls for ‘breaking it up’ seems hard enough, particularly when Facebook has said that separate parts would remain separate – ‘In March 2018 — before GDPR came into effect — a plan to share data between WhatsApp and Facebook was ruled as illegal by the U.K. Information Commissioner’s Office (ICO).

At the time, the ICO said it had investigated whether WhatsApp could legally share user data with Facebook, finding that “such sharing would involve the processing of personal data for a purpose that is incompatible with the purpose for which such data was obtained.”

The Irish Data Protection Commission has called on Facebook to provide it with an “urgent briefing” on the proposals.

In a statement, the Irish watchdog (Facebook’s European HQ is in Dublin) said it understood the plan was at a “very early conceptual stage” but that it would keep close tabs on the process.

“The Irish DPC will be very closely scrutinising Facebook’s plans as they develop, particularly insofar as they involve the sharing and merging of personal data between different Facebook companies,” it said.

At the moment, WhatsApp and Instagram users are identified by their phone numbers, while Facebookers sign up with other information. Bringing the three platforms together would give the Zuckerberg the ability to greatly expand its already detailed profiles of users, creating an even more lucrative data set to mine for ad revenue.’

The European Commission also fined the tech giant 110 million euros ($122 million) in 2017 for giving “misleading information” about its acquisition of WhatsApp. Facebook bought Instagram in 2012 and WhatsApp in 2014.’

As noted by The Register – ‘Facebook has been warned it can only borg its three messaging platforms in the European Union if it meets data protection rules. There are widespread concerns about the plan’s impact.

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