Could Facebook's social media dominance by weakened by regulation?

This week, The New York Times has published a new article which digs into questions around Facebook's rising dominance, and how the company has sought to acquire competitors in order to maintain its position - raising eyebrows among regulatory groups.

Among the various elements raised within the article, NYT interestingly notes that, late last year, Facebook was in advanced talks to acquire multi-participant live-streaming app Houseparty, which was launched by the makers of former live-streaming hype leader Meerkat back in 2016.    

As explained by NYT:

"Last December, Facebook executives were in advanced discussions to buy Houseparty, a social networking app that lets multiple people video chat on their mobile phones at once, said two people with knowledge of the talks. Houseparty [...] was especially popular with audiences under the age of 24. Facebook, whose members are getting older, has coveted younger users. But weeks into the discussions, Facebook’s corporate development team killed the talks with Houseparty, the people said. Houseparty’s executives were told that a deal would draw unwelcome federal government scrutiny to Facebook, they said."

The revelation if interesting for several reasons - for one, it underlines just how serious Facebook now takes competition from rising apps, as it seeks to avoid another Snapchat-like situation.

As has been well-documented, Facebook sought to acquire Snapchat back in 2013, when Snapchat was just starting to rise in popularity. Snap CEO Evan Spiegel famously turned down a $3 billion offer from Zuck and Co., sparking a long, competitive saga which is what initially prompted Facebook to push harder into the Stories format that's now become a key element of Instagram.

At the time, Facebook had been using an app called Onavo to gather information on competitors - Onavo, which Facebook also subsequently acquired in 2013, collects app usage data from its customers which it can then use to assess how many people are downloading specific apps, and how often they use them, providing valuable consumer trend info.

Using this insight, Facebook sought to get the upper hand on potential competitors, and make acquisition offers for them in the early stages of any such rise in popularity. Facebook has more recently been forced to scale back its reliance on Onavo due to privacy concerns. 

Facebook clearly saw Houseparty as another potential threat in this respect - which is not overly surprising, given that Facebook also sought to launch its own clone of Houseparty, called Bonfire, back in 2017.

Bonfire was officially shut down as a project in May, months after Facebook had also, reportedly, abandoned acquisition talks with Houseparty, which itself was acquired by Epic Games in June.

Group video chat hasn't yet caught on as the next big thing, which seemed to be Facebook's key concern, but it's interesting to note the lengths that Facebook went to in order to eliminate a potential competitor, and further solidify its dominance.

That's become a key area of interest for regulators - as noted by NYT, Facebook abandoned its talks with Houseparty over concerns about "unwelcome federal government scrutiny" of any such deal. That concern, along with the forced scaling back of Onavo, could potentially make Facebook more vulnerable to competition. It seems like The Social Network has a hold on the social networking space, controlling all of the dominant social media and messaging apps, especially in the western world. But maybe, through increased scrutiny, Facebook could be forced to let new competitors rise.

That could be a good thing for the sector, opening up more opportunities for apps like Snapchat to build alternate platforms for attention, and reducing Facebook's control - which has become particularly problematic in regards to algorithm influence. It also highlights just how serious Facebook is taking the threat of regulation and oversight. Already, Facebook has flagged its intentions to further integrate its apps, which many see as a move designed to fend off any potential break-up of its companies. 

If regulators see it the same way, that could give them more impetus to push for a separation of Facebook's empire.

Essentially, the reports indicate that not only is group video messaging an area where Facebook saw significant potential just a few months ago - which may make the functionality something to keep an eye on in future. But also, that Facebook is more concerned about potential regulation than it may have initially seemed. 

If new rules are imposed on The Social Network, that could have major impacts on the sector overall. 

Definitely an element to watch.