Can someone help me understand why the acquisitions here are considered anticompetitive?
I get it, if I buy the competition, then I'm reducing my competition. If I'm a car wash and I buy another car wash across the street, arguably our services overlap 100%. But maybe the acquired carwash was $4 more expensive and served a more luxury clientele. Is that a competitor or not a competitor or both?
How can you also ever prove that a company being acquired was truly a competitor? What percentage overlap on products and services would be necessary to deem that company a competitor?
My bet is that there is a lack of science here and surplus of qualitative judgment. Educate me please... :)
I can't speak on how you can measure overlap, but after reading the FTC summary linked, it seems like the acquisitions are considered anticompetitive because Facebook recognized both Instagram and Whatsapp as potential threats to their primary product - Facebook - and sought to acquire them to neutralize that competitive threat.
Just to add - they also say the lawsuit is focusing not just on anticompetitive acquisitions, but anticompetitive practices related to developer access to APIs. Apparently Facebook has been heavy-handed towards developers that sought to use their APIs for any product that might have overlapped with their products. An example is Vine - Vine was apparently blocked from using the Facebook API to share videos or something.
I get it, if I buy the competition, then I'm reducing my competition. If I'm a car wash and I buy another car wash across the street, arguably our services overlap 100%. But maybe the acquired carwash was $4 more expensive and served a more luxury clientele. Is that a competitor or not a competitor or both?
How can you also ever prove that a company being acquired was truly a competitor? What percentage overlap on products and services would be necessary to deem that company a competitor?
My bet is that there is a lack of science here and surplus of qualitative judgment. Educate me please... :)