U.S. The Federal Trade Commission has taken a key step in the breakdown of Facebook Inc., which has formally filed a no-confidence case against the technology company, accusing it of abusing its monopoly powers on the social network to prevent competition. The FTC-state alliance also acquired Facebook Instagram for $ 715 million in 2012, and two years later acquired the $ 22 billion deal for the WhatsApp news service. The commission wrote in its complaint on Wednesday that the contracts they had traveled with when proposed by regulators in the past would “shatter” competitive threats. Now, the FDC wants to divert both businesses – posing an existential threat to the empire built by CEO Mark Zuckerberg. Because most of the company’s revenue growth already comes from Instagram, and WhatsApp is the hub of Facebook If you bet on digital commerce, losing both sites threatens to destroy Facebook’s long-term value. Shares of the company, which had risen more than 35% in 2020, fell 4% on Wednesday and fell 2% on the trading day. “Breakups are scary for investors because in some ways they can disrupt business models,” said Dan Yves, a researcher at Wetbush Securities. However, Eves believes that the possibility of a real breakdown without legislative changes from Congress is “slim” and that this is not possible. “It’s a quiet topic, but it doesn’t change Facebook’s situation much.” In the distant prospects, however, any sign of the FTC split could weigh more heavily on Facebook’s stock. Facebook precisely bought these promising competitive sites because it expects the mainstream social network to one day fade, and it wanted to be the company that would determine what applications people would use next. Just as he began to pay for the enormous investments he made in Instagram and WhatsApp, a breakdown of Zuckerberg’s hedging for Facebook’s future will fail. Facebook argues that those investments made Instagram and WhatsApp what they are today. Watch: Facebook faces two lawsuits from U.S. trusted officials and a coalition of states. “Our acquisition of Instagram and WhatsApp has dramatically improved those services and helped reach more people,” Zuckerberg wrote in a post to staff on Wednesday. “We compete fiercely, we compete fairly and I’m proud of it.” Here’s how the forced breakdown will affect Facebook’s opportunities. This year, the company has created ways to shop directly on Instagram with pictures and videos, and has mobilized businesses around the world to use WhatsApp to communicate with customers. Menlo Park, based in California, plans to link WhatsApp chat to Instagram shopping, but not business. Without those two attributes that depend on s, Facebook’s path to becoming an e-commerce company seems very difficult. Revenue Growth Facebook’s user numbers have begun to establish themselves in some of its most valuable markets, and the company has been warning for years that the advertising space of the main news feed is getting enriched. That means the company’s latest revenue growth is driven primarily by Instagram. Photo and video sharing usage generated about $ 20 billion in revenue in 2019, the equivalent of 29% of Facebook ad sales last year, according to Bloomberg. Research firm EMarketer estimates that Instagram’s 2020 sales will reach $ 28.1 billion, or 37% of Facebook’s total ad revenue. EMarketer reports that Instagram’s .18.1 billion annual sales gain will account for the bulk of Facebook’s ad revenue growth. Meanwhile, WhatsApp is almost never making money on Facebook. It is expected to change soon as the company builds a big bet on payments, trade and customer service tools for more than 2 billion users of the messaging app. Any revenue that WhatsApp brings will further boost the growth of Facebook. International Markets Both WhatsApp and Instagram are key to Facebook’s international strategy, providing the company with stronghold in fast – growing markets such as India and Brazil. In some countries, there are more WhatsApp or Instagram users than their parent company. In India, for example, EMarketer reports that WhatsApp has more than 100 million users than Facebook. This is important for Facebook, which considers India as the next best internet frontier, and the company is concerned that Chinese competitors may get there first. In Japan, Instagram has more than 70% more users than Facebook’s main site. While Facebook is still the largest social network in the world, Instagram and WhatsApp provide a much bigger track than just a complete service. Losing those apps will dramatically reduce Facebook’s total number of users – and, in turn, its revenue. Demographics Everybody uses Facebook. Everyone except teenagers, that is. 51% of 13- to 17-year-olds said they used Facebook in 2018, up from 71% a few years ago. Instagram, meanwhile, was used by 72% of American youth. Facebook is not as popular as it once was with the younger generation of Internet users because it is more competitive with General Z consumers. Instagram has been the company’s secret weapon to bypass Snapshot, and could eventually prove to be a bulwark against viral video over Dictoc. Without Instagram, Facebook would have to create its own products, which would attract the youngest and most desirable group of Internet users – something that could not be done recently. Without Instagram under the same roof there is no sign of being able to do so all of a sudden. It is common for people to say they are leaving Facebook and plan to use Instagram as Facebook faces fraud in connection with privacy violations, misinformation and election interference. And WhatsApp as an alternative to staying in touch with friends and family online. Although they are all part of the same company, Facebook understands that it has a very positive public reputation for its growing children. The company recently slapped the Facebook business on the sites of other members of its family in an attempt to snatch some of those positive emotions. Without Instagram, it would now be branded as “Instagram from Facebook,” for example, and Facebook would not benefit from the highly positive approach the app has maintained among its users. WhatsApp + Instagram Facebook will not be the only company Exclusion is ultimately a struggle if needed. WhatsApp has not focused on revenue or profit for the past six years, but has focused on user growth, reliability and encryption, thanks to Facebook’s strong advertising business, which has paid the bills. WhatsApp builds a business, but there is no guarantee that it will pay off, and WhatsApp will be under more pressure to make money without Facebook’s deep pockets. Instagram, meanwhile, relies on Facebook for many areas of its operations, including technology that powers the advertising business and content size. An Instagram spinoff would mean creating a completely new ad site, cutting off access to important target data that Instagram receives from users’ Facebook profiles, and making ads less relevant to the app. The photo-sharing app also relies heavily on Facebook’s automated content-monitoring tools to combat hate speech, terrorist content, and other forms of inappropriate user posts – a system push in which the company has invested billions to create and maintain security and security. An independent Instagram should create those tools on its own. Before it was here, it was at the Bloomberg terminal. Learn more.
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