In the 1860s the first transcontinental cable was laid on the ocean floor. While it miraculously connected North America with Europe, communication via the connection was only affordable to the richest of the very rich.
If you wanted to send word or news to Europe the cost was $10 per word, with a 10-word minimum. $100 is a lot of money now, while in the 1860s it was a pretty remarkable sum.
The nosebleed communications costs of old are worth thinking about as an FTC staffed by the well-educated and well-to-do take Meta to trial for having had the temerity to acquire WhatsApp and Instagram. Supposedly the acquisitions were too successful, the acquired have become too big, thus the lawsuits. Put another way, if Meta had overpaid for both such that the purchases were viewed as duds, then it’s safe to say the FTC wouldn’t be on the attack. Stop and think about that…
Of course, it’s easy to forget that with each purchase there previously was some kind of consensus that Meta did in fact overpay. How do we know the previous assertion is true? It can be found in Facebook purchasing Instagram for $1 billion in 2012 and WhatsApp for $19 billion two years after.
If the competition had known what the FTC thinks it knows now, then it’s a safe bet that Meta would have had to pay quite a bit more for both. Translated, antitrust by its very name is always and everywhere a look backwards, at which point readers can rest assured that in focusing on WhatsApp and Instagram, the always backwards looking FTC has its back to the business (or businesses) that loom as actual threats to the primacy of WhatsApp and Instagram. The FTC can’t see its future targets.
Yet there’s more. There’s still the communications angle, and costs associated with it. That there is requires a pivot to the Consumer Welfare Standard that has historically informed antitrust action. About the Standard, it’s truly bothersome to yours truly. Seriously, how could government officials only capable of discovering the genius of a market good or service after the fact know in advance what’s good for consumers?
Figure that if they knew such things ahead of time, they would be investors or entrepreneurs, as opposed to ankle-biting antitrust cops. Translated, the surest sign that WhatsApp and Instagram were marketplace question marks (or jokes) before they weren’t can be found in valuations for each that well exceed $100 billion. No one knows anything. Get it?
If the commercial future is opaque, and it is, then by definition there’s no way for FTC officials to decide the consumer good or bad of any corporate acquisition. Which is ok. Markets themselves are expert at shedding light on the combinations that meet and lead consumer needs, along with the ones that don’t.
Just the same, it’s easy to see from a consumer standpoint that Meta’s acquisitions of both WhatsApp and Instagram have proven rather beneficial to the consumer. Evidence supporting the previous claim can first be found in the immense popularity of both, popularity that has given FTC officials the vapors. Put another way, if Meta’s acquisitions hadn’t proven fruitful, then the FTC would have no interest in Meta.
Lastly, stop and consider WhatsApp and Instagram through the prism of communications in 1860. Whereas a 10-word note used to cost the sender of same $100, WhatsApp and Instagram users can communicate with the whole world in costless fashion. To ask if these acquisitions meet the Consumer Welfare Standard wastes words.
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