Fb is spending billions to purchase up the metaverse

Of the many complaints about Facebook, one comes through consistently: It’s just too big. Because of this, some critics and regulators want to downsize it by forcing Mark Zuckerberg to make big acquisitions like Instagram.

Zuckerberg’s answer: let’s get bigger by buying more things.

After a brief slowdown in 2018, the year the Cambridge Analytica scandal erupted, Facebook has steadily made large acquisitions – at least 21 in the past three years per data service Pitchbook.

Many of the deals have been announced since December 2020, when the US government first filed an antitrust lawsuit against the company, accusing it of maintaining an illegal monopoly on social networks by buying or smashing competitors. The original lawsuit and a revised complaint are aimed at forcing Facebook to part ways with both Instagram and WhatsApp.

In recent years, Facebook’s appetite for deals has grown from Giphy, which lets you put funny GIFs on your social media posts, to Kustomer, a business software company for Facebook’s corporate clients. Most of them, however, have focused on one area: gaming and virtual reality. That makes sense, since Zuckerberg has officially announced that gaming and virtual reality, bundled in the extensive and difficult-to-define section of the “Metaverse”, are the future of Facebook.

Therefore the company name changes to Meta. But more importantly, the promise that Facebook will involve thousands of its employees in the effort, planning to lose $ 10 billion this year alone, and much more “for the next few years”.

The day after Facebook announced the name change, the company revealed how it will be spending some of that money: a deal to buy Within, the company co-founded by VR pioneer Chris Milk, primarily for its Supernatural -Workout app is known. People familiar with the transaction say Facebook paid more than $ 500 million for the company.

Other Metaverse-y deals announced earlier this year include Unit 2 Games, which makes a “collaborative game development platform” called Crayta; Bigbox VR, a popular game for Facebook’s Oculus VR glasses; and Downpour Interactive, another VR game maker.

The government doesn’t necessarily have to win a lawsuit or pass a law to slow or stop Facebook’s ambitions

These deals caused a stir even before Facebook officially announced that they represented the company’s future. So what should we think of them now?

That said, if you think Facebook needs to be broken up in 2021, in part to undo past deals like Instagram ($ 1 billion, 2012) and WhatsApp ($ 19 billion, 2014), then you shouldn’t, too Worrying about deals Zuckerberg is now doing to build the 2031 version of his company?

A Facebook representative was happy to explain the difference to me: unlike social networks a decade ago, Facebook isn’t a leader in virtual reality / augmented reality / pick a name for it – many large, financially strong companies spend a lot of time and money on it. And Zuckerberg, as he has pointed out, envisions a future in which Facebook just happens to be one of several companies in the metaverse.

Here is the statement on file that the company gave Recode to explain the thesis:

“Investing in and building products that consumers want is the key to success. We can’t build the Metaverse on our own – working with developers, creators and experts will be crucial. When we invest in the Metaverse, we know that at every step of this journey we are facing stiff competition from companies like Microsoft, Google, Apple, Snap, Sony, Roblox, Epic and many others. “

Translation: In the near future, Facebook is excited to see Snap keep trying to sell sunglasses that record videos and communicate with your phone, as these are theoretical competitors of Facebook sunglasses that record videos and communicate with your phone. And Facebook will also be happy next year when Apple is supposed to present its virtual reality headset, because it will compete with Facebook’s Oculus headsets.

But it’s also hard to imagine that Facebook hopes Apple, Snap, and everyone else will be strong competitors forever. After all, one of the main reasons Zuckerberg is interested in the Metaverse is because he imagines himself that it can give him a way to get in direct contact with his customers without relying on Apple and Google’s telephone duopoly.

Facebook’s acquisition frenzy also shows how difficult it is for antitrust authorities to grapple with a fast-moving and unpredictable industry. Even the most aggressive antitrust measures in recent years are designed to go back in time and fix alleged errors.

Or they focus on the now, like a bill that would prevent big platforms like Facebook from doing big business in industries they currently dominate.

So how do you look to the future and estimate that Facebook – not Google or Epic Games or Roblox or some startup you’ve never heard of – will end up dominating the metaverse? Especially if the metaverse doesn’t exist, maybe never exists, or could exist in a completely different form than Zuckerberg, science fiction writers, tech managers and investors imagine today?

I asked the Federal Trade Commission, the agency currently suing Facebook over its Instagram and WhatsApp deals, what they think of Facebook’s metaverse ambitions and purchases, but I don’t expect an answer – in part because the agency doesn’t want it through Facebook to speak while in a long battle with Facebook, but also because it probably doesn’t know what it’s thinking.

At this point, it should be noted that the government doesn’t necessarily have to win a lawsuit or pass a law to curb or stop Facebook’s ambitions. Some tech investors I’ve spoken to say they believe Facebook is no longer in the market for social networking-related acquisitions – at least temporarily – simply because there is too much control and anger.

“It just feels as if it is going to be very difficult for Facebook in particular to acquire something in the social sector,” says a venture investor who has sold companies to Facebook in the past.

And that may not only apply to large acquisitions, but even to small “acquisitions” – deals for overwhelming companies that were made just to get their engineers and other employees on the Facebook payroll.

Washington has already signaled that it wants to pay more attention to small deals: In September, the FTC released an analysis of 616 transactions by Facebook, Google, and other big tech companies over the past decade that weren’t big enough to trigger regulatory oversight.

But the existence of the report makes it clear that regulators feel they should be looking at more deals, not fewer. FTC Commissioner Rebecca Slaughter made it even clearer: “I see serial purchases as a Pac-Man strategy,” she said when the report was released. “Any single merger, taken independently, does not seem to have a significant impact, but the collective effects of hundreds of smaller acquisitions can lead to monopoly behavior.”

You can debate whether Facebook has a monopoly on social networks today – the company is pleased to point out TikTok’s success almost overnight to argue that it doesn’t. But its enormous wealth and power are beyond question. The real question: will we let it use these resources to extend its power into the future?

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