Mark Zuckerberg Emails Outline Plan To Neutralize Competitors (theverge.com) 64
An anonymous reader shares a report: In late February 2012, Facebook CEO Mark Zuckerberg emailed his chief financial officer, David Ebersman, to float the idea of buying smaller competitors, including Instagram and Path. "These businesses are nascent but the networks established, the brands are already meaningful, and if they grow to a large scale the could be very disruptive to us," he wrote. "Given that we think our own valuation is fairly aggressive and that we're vulnerable in mobile, I'm curious if we should consider going after one or two of them. What do you think?" Ebersman was skeptical. "All the research I have seen is that most deals fail to create the value expected by the acquirer," he wrote back. "I would ask you to find a compelling elucidation of what you are trying to accomplish."
Ebersman went on to list four potential reasons to buy companies and his thoughts on each: neutralizing a competitor, acquiring talent, integrating products to improve the Facebook service, and "other." It's a combination of neutralizing a competitor and improving Facebook, Zuckerberg said in a reply. "There are network effect around social products and a finite number of different social mechanics to invent. Once someone wins at a specific mechanic, it's difficult for others to supplant them without doing something different." Zuckerberg continued: "One way of looking at this is that what we're really buying is time. Even if some new competitors springs up, buying Instagram, Path, Foursquare, etc now will give us a year or more to integrate their dynamics before anyone can get close to their scale again. Within that time, if we incorporate the social mechanics they were using, those new products won't get much traction since we'll already have their mechanics deployed at scale."
Forty-five minutes later, Zuckerberg sent a carefully worded clarification to his earlier, looser remarks. "I didn't mean to imply that we'd be buying them to prevent them from competing with us in any way," he wrote. The emails between Zuckerberg and Ebersman were revealed today during the House antitrust subcommittee's hearing on antitrust issues in tech, as Rep. Jerry Nadler (D-NY) questioned Zuckerberg about the Instagram acquisition. The emails, along with several other messages and documents from 2012, show that Facebook -- and Zuckerberg, in particular -- wanted to buy Instagram to avoid competition, the committee argued.
Ebersman went on to list four potential reasons to buy companies and his thoughts on each: neutralizing a competitor, acquiring talent, integrating products to improve the Facebook service, and "other." It's a combination of neutralizing a competitor and improving Facebook, Zuckerberg said in a reply. "There are network effect around social products and a finite number of different social mechanics to invent. Once someone wins at a specific mechanic, it's difficult for others to supplant them without doing something different." Zuckerberg continued: "One way of looking at this is that what we're really buying is time. Even if some new competitors springs up, buying Instagram, Path, Foursquare, etc now will give us a year or more to integrate their dynamics before anyone can get close to their scale again. Within that time, if we incorporate the social mechanics they were using, those new products won't get much traction since we'll already have their mechanics deployed at scale."
Forty-five minutes later, Zuckerberg sent a carefully worded clarification to his earlier, looser remarks. "I didn't mean to imply that we'd be buying them to prevent them from competing with us in any way," he wrote. The emails between Zuckerberg and Ebersman were revealed today during the House antitrust subcommittee's hearing on antitrust issues in tech, as Rep. Jerry Nadler (D-NY) questioned Zuckerberg about the Instagram acquisition. The emails, along with several other messages and documents from 2012, show that Facebook -- and Zuckerberg, in particular -- wanted to buy Instagram to avoid competition, the committee argued.
IN THE MIDDLE OF A HEARING ABOUT ANTI-TRUST (Score:4, Insightful)
you just can't make this shit up
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Anti trust has zero teeth in the US because the politicians aren't going to cut off their nose to spite their face.
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Just call me MadDog then. woof.
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In many other countries and eras, I'd be executed just for the things I speak about. I say it every day, to everyone I can, because that's my duty as a citizen of this nation. We have a responsibility to care for our own government if we are to say that it is of the people, by the people, and fkr the people. These are our people, misguided as they might be.
If I speak now, maybe the government sanctioned murders in the street can stop. Maybe people living now will get to continue living their full lives. If
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Re:IN THE MIDDLE OF A HEARING ABOUT ANTI-TRUST (Score:4, Informative)
"These kinds of ideas" mean something extremely specific, and they did back in 2012 too. Also, in 2012 Facebook was far from an "up-and-coming unicorn startup", it had a billion "users" and was valued at over $100 billion during it's successful (2012) IPO, giving it a greater valuation than notable companies such as Disney and McDonalds. So...bullshit.
Not up and coming, not antitrust (Score:3)
GP was half right, half wrong.
The first four words of the summary are "In late February 2012". So the emails were not sent "in the middle of an antitrust investigation", they are old emails that are being discussed as a part of the investigation.
On the other hand, Facebook wasn't new in 2012.
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Yes, the IPO was after these e-mails were sent (May 2012). In January they were still a privately held company with barely 1B accounts. The IPO was used to raise money of the hype, sure it had people, but there were plenty of stories about how many accounts were not active, bots and used to boost its IPO.
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Facebook wasn't up-and-coming in 2012, it was already well established at $5B revenue.
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"Bullshit," as the idiot above me said, but not in any way flamebait as it's currently moderated. There is no "I disagree" mod on Slashdot. The groupthink is bad enough here without that BS.
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How is this not flamebait? The posts above yours are actively and quickly pointing out that guruevi's post was at best misinformed, but seems far more intent on sparking a flame war then anything.
Merely holding a differing opinion is not "trying to start a flame war". The post was not worded in a particularly incendiary way, no personal abuse or allusions to Nazis or any such thing. It's just, like, an opinion, man.
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Do all the people insisting that Facebook not be regulated as a publisher at least agree that they should be regulated as a monopolist? They certainly have "monopoly power", with such a dominant market share. Or is it all anarcho-capitalism now, corporate rights all the way?
but how? (Score:2)
Definitely! The big question is how to do it. My preference would be an open protocol (like email) so users can chose their preferred social networking provider (or run their own "social server") and still be able to connect with users who have chosen a different social network provider. Unfortunately, the more likely result will be requiring Facebook to spin off Instagr
It's already illegal - that's why the CYA email (Score:5, Interesting)
Zuckerberg sent the back-pedal email 45 minutes later because he knew that what he had just suggested is illegal. It's *already* illegal to attempt to gain or maintain a monopoly by buying up potential competitors. No new regulation is needed - the FTC could bust Facebook *today*.
The question of whether I am responsible for the things I write and post on Facebook or whether Facebook is responsible for what I write is a totally unrelated question. That also gets into how thr Facebook algorithm selects which posts display when you first log in. That's a completely separate issue, though, in no way related to their anti-competitive conduct.
Nothing wrong with illegal suggestion (Score:5, Interesting)
Zuckerberg sent the back-pedal email 45 minutes later because he knew that what he had just suggested is illegal.
And there's nothing wrong with that.
It's perfectly reasonable for a non-lawyer to suggest something illegal, only to be told that it's illegal. It's how non-lawyers find out what they can and cannot do, and Zuckerberg is not a lawyer. I would expect that the CFO would be much better informed about whether what Mark suggested was illegal.
It's also perfectly reasonable for someone to send an E-mail and later realize that it might be taken in a way that was not intended. That happens all the time.
I don't find any of the discussion listed in the OP to be problematic, finding new goods and services, improving their experience is something the CEO is expected to do, and buying up smaller companies is also something we see every day and no one bats an eye at it. Amazon purchased "Whole Foods" and got into grocery delivery, for example, which is a far cry from their original purpose as used book seller.
What should concern people isn't words, but actions.
We have free speech for a reason, it's one way that people learn (such as what's possible, what's illegal, what's a good or bad idea) and it's also one way that people build on each others' ideas. It's entirely possible to suggest something illegal, and have someone else have a modification that makes it *not* illegal.
It's one of the reasons people evolved to have abstract thought: instead of trying something and dying you can generate ideas, run them in mental simulation, and have the ideas die instead of you. You can pass rough and ill-formed ideas to others and have them add their expertise to make a better idea.
I don't see anything wrong with the dialogue posted in the OP.
Microsoft examining a company in detail for purchase and then coming up with a competing product 6 months later is action that should be curtailed.
But talking about things is harmless. That's why it's a right.
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many actually later looked at the two carefully (says vs. does) and come back to me and say something like "wow, it is like he is two different people, why?"
I am willing to be convinced. Speech alone doesn't bother me. I'd like a couple examples of his direct (or, through the Executive) action you think are indicative of his leadership capacity.
If he's really pushing great policies, better than his opponents, I'll go vote for him. Results do matter where it concerns the direction of millions. Picking a good leader helps us all, even if they say things we dislike.
That aside, you've got a high barrier after that whole church-bible-protesters thing. But I remain w
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Depending on what state you live in, it won't matter anyway.
Sigh. I hate being in a "decided" state.
Unless it's illegal because it is wrong (Score:2)
To clarify, he said they would probably lose money by acquiring the company, but they should do it anyway in order to harm competition more than it harms them.
Punching someone in the face is illegal because it is wrong - it's an asshole thing to do.
Smashing someone's car with a bat is illegal because it is wrong - it's an asshole thing to do.
Refusing to hire the most qualified person because you don't like their race or genitalia is illegal because it is wrong - it's an asshole thing to do.
Intentionally har
Re:Nothing wrong with illegal suggestion (Score:4, Insightful)
Every high school kid knows what a monopoly is. Zuckercluck is college-educated and an entrepreneur. He'd been in business at the executive level for almost a decade. The argument of "He didn't know!" is absurd on its face. It's also not a legal defense.
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The question of whether I am responsible for the things I write and post on Facebook or whether Facebook is responsible for what I write is a totally unrelated question.
The question is very related, IMO. The government has the right to control a monopolistic business for the public good, in many ways that it would not otherwise. It's not just about product pricing, it's also about much more general behavior of a monopoly towards its customers. A monopoly can be held to a higher standard of consumer rights than a normal business in a competitive market, precisely because a consumer can't go elsewhere.
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The Amazon story just posted to Slashdot is a perfect example of my point here. The government has an interest Amazon being both a seller and a platform precisely because they have a dominant position in online retail.
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The emails are from 2012. They just now came up during the antitrust probe as that's the point of the probe, to bring up past actions which may have been anti-competitive.
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Yea, I'm sure the sperm YOU'RE swallowing is so much more pure and holy.
Fuck you.
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I feel like I could use a good facefuck, personally. Different strokes... Stroking my dillypickle alone gets boring.
Oh what faceBOOK? Oh no fuck that. (I hear Zuckercluck in my ear now... "You'll never get any sex without a Facebook account... You'll never talk to your family again without Facebook...")
Hardly news (Score:2)
The business "killzones" around Silicon Valley megacorps don't exist by mistake.
These are not coincidental things (Score:2)
"Facebook is silencing Trump as much as it can get away with! We've even adopted the memewrapper 'it's not just wrong, it's dangerously wrong! Please don't use laws to hurt us further!"
Nah. These are completely separate issues, and fb is doing this out of a sense of propriety, so it's not a First Amendment thing.
Now let's get back to the hearings on hurting facebook by fining them, and section 230 changes.
Read carefully (Score:2)
"I would ask you to find a compelling elucidation of what you are trying to accomplish."
Notice he didn't say "find something compelling to accomplish" but rather "find a compelling explanation for what you're trying to accomplish". It's clear the goal was to squash competition, what he was urging was for Zuckerberg to take care in making it sound as if there was a viable business reason other than anti-competitive behavior.
Also, Zuckerberg doesn't know the difference between "mechanic" and "mechanism", a c
but not TOO carefully (Score:2)
I wasn't aware that grammar mistakes were a symptom of being a sociopath (although I'm pretty sure being a grammar Nazi IS a symptom).
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Well, Zuckerberg might be a lot of things but he's certainly not stupid. Had he stuck it out at Harvard I have no doubt he would have graduated at the top of his class. He is most certainly a prick, and maybe a sociopath, but I wouldn't read too much into the misspelling in his email. I'm sure he sends hundreds of them every day.
Is that illegal though? (Score:4, Interesting)
Is maintaining first-move advantage a type of "preventing competition"? There's a huge grey area between those. This isn't going to be resolved through Congressional hearing.
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I also ask this. If you have a company and I make an honest offer to buy your company, where is the evil? Even if my intention is to close the company so it can't compete with mine. If you're a smart business owner, you will want a price today equal to the (future value of) the total profits you expected to earn over X years.
Essentially, I have to offer to pay you your expected profits in advance in trade for your company. You get your profits now instead of later. I have to deplete my cash now instead of y
Re:Is that illegal though? (Score:4, Insightful)
The evil is in the monopolistic intent. It's not harming the company being bought out necessarily, it's harming society and the wider economy and likely also their customers, and this is the context in which it is anti-competitive.
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It's more complex than that. Monopolies are not inherently illegal. What is illegal is using your position of being a monopoly to prevent competition. Where a particular action is simply good business or is preventing competition is a really vague line.
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As I recall there's been at least one mathematical analysis showing that monopolistic inefficiencies will begin appearing whenever one company has at least 10% market share.
Yeah, that free market ideology? It can't exist in the real world except perhaps for the most interchangeable of commodities.
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It's an interesting coincidence that supply-and-demand pricing only seems to exist in pricing for highly interchangeable commodities and services, while charging what the market will bear is far more common.
Re: Mens Rea (Score:2)
It's not whether they have a universally needed product. It's that their product (social media) has near universal control over the market it operates in.
sham hearings (Score:1)
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45 minutes later (Score:3)
That's how long it took for his legal counsel to recover from the heart attack, run to Zuck's office, and dictate the "clarification" e-mail.
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That's because the overlords are always right and always get their way. They expect fealty from their politicians and human capital. Their word, policy, is law in their eyes, and the real law is a vestigial relic of our republic.
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https://www.breitbart.com/tech... [breitbart.com]
Going rates on politicians, as low as $198! Hot damn!
+1Informative
He's not wrong (Score:5, Insightful)
If there's one thing we've seen in the past 20 years it's that the online world isn't really a healthy marketplace. In most niches there just aren't multiple competing businesses, there is one dominant player and much smaller companies flitting at their ankles, hoping to catch that one wind that takes them to the top spot. Google, Amazon, ebay dominate their market spaces, with their only direct competition being foreign (aka Chinese).
What Zuckerberg is saying here is that when facebook loses the top spot it will be to a competitor who is leveraging a new feature, and when that happens facebook is essentially done. He doesn't envision a world where there are two social networks, both alike in dignity, engage in productive competition. Instead he sees a world where the ascendant drives the established to ruin. In this worldview, his goal is simply to survive as long as possible. To do that he is trying to keep any weapon he can (ie new features) out of the hands of potential usurpers. Based of what we've seen of online empires so far, I honestly think his reasoning is sound. Something fundamental needs to change in the way we use the internet for multiple competitors to be viable.
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If we could come up with a federated system that lets people run their own servers it might work, but it would actually need ads and all those games. I say this as a husband that watches his wife surfing facebook. She clicks ads of stuff she might actually buy and it's rather good at those suggestions. Luckily she just likes to window browser a lot. She also must have her games.
If all you wanted was a chat setup, https://diasporafoundation.org... [diasporafoundation.org] seems like a good fit for the privacy folks but it doesn't ha
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It's not the network, it's the network effect. It doesn't matter how many Facebook clones you build with your fancy (and even more easily broken) technology, if no one wants to use them, it will be a futile effort.
The local nerds, as usual, think that the mechanism for shuffling bytes just needs to be there and the internet gets better. That's not how things work. But it's not surprising the nerds get this wrong - success on the internet, for better or worse, is driven by popularity. This is something that
effective preposterous legal inoculants (Score:2)
from the /. summary
That Zuckerberg considered buying out the competition to prevent competition is precisely what he had previously written.
He obviously sent the followup denial to protect Facebook against legal action for anti-competitive behavior.
Why does it work that way? Why is the legal system so screwed up that idiotic shit like that works well enough for CEOs to do that?
Is this the true face of Facebook? (Score:2)
Once Facebook has got a monopoly and all competition is neutralised will they go after their customers who pose a threat to their business, because then openness will be of little use when customers can go nowhere else and getting back the big advertisers who have left will openness pose a threat to their revenue. And threats get neutralised.
it takes two to dance (Score:1)
It takes two to dance: an acquisition needs the CEO of the company to have a will to sell it's ownership as well.
"forty-five minutes later" ... (Score:1)
You man much much later, when someone edited the mailbox file to put a new "e-mail" in, that would not make Zuck look too bad, before sending it off to congress before anyone would notice the delay.
clarification (Score:2)
"Yes, we is blasting into that bank vault, but I don't mean to imply that we is going to steal all the money in there."
How does this work? (Score:1)
So if you buy a competitor to stop them from competing with you, that's illegal, but if you buy a competitor to get technology, staff and infrastructure allowed them compete with you, that's legal? Am I getting this right?