Kevin Stecko is the founder and president of  He's been operating the business since December of 1999.

The Problems With Breaking Up Facebook and How It Could Work If It Were Done

There’s a lot of talk about antitrust suits potentially coming against Facebook, Amazon, and Google. I’m totally on board with Google. I believe the internet would be better if one company didn’t control the most popular mobile operating system, the most popular browser software, the most popular email client, and of course the most popular search engine.

I think the case for breaking up Amazon is much weaker, although the fact that Amazon can take the profits from AWS and use it to destroy so much of the rest of retail doesn’t seem healthy. So I think it would be great to force AWS to become it’s own company and let the retail / fulfillment business stand alone.

Breaking up Facebook would be a terrible idea, though. The thing I hear most is to undo the Instagram and WhatsApp acquisitions. I’ll go ahead and state that I really don’t know much about WhatsApp. But I’ve got a good handle on Facebook proper, Instagram, and the advertising business in general. I think it’s pretty clear that Instagram would not be where it is today had Facebook not acquired it. The best evidence of this is the quality of targeting that Facebook can offer marketers. Instagram by itself could not have replicated the ad platform. So all Instagram had to do was get eyeballs, and Facebook turned those eyeballs into money. Without the money that Facebook generated Instagram isn’t able to grow the way it has. Without the ruthless attitude of Facebook Instagram doesn’t take the story concept from Snapchat and essentially kill any reason for adults to migrate to Snapchat. It’s likely that Instagram would have been an also ran in the long run without the Facebook acquisition. So let’s not act like Facebook blocked a bohemeth from competing with them. They took a 12 person company with a growing photo sharing app and created a bohemeth.

If Facebook were broken up it would be a major pain for small advertisers to have to place ads on both Instagram and Facebook. I sincerely doubt that ad prices would be lower, because Pinterest and Twitter both have more expensive ads than Facebook and they each represent a rounding error in terms of relative size to Facebook. So small marketers lose the most under a split.

So let’s say Facebook is forced to split up. Who gets to use the ad platform? Because without access to the ad platform Instagram isn’t a viable or valuable company. One thing that could work would potentially be that the ad platform (and all targeting and identity capabilities) splits off into a separate company and the apps can pay to use the platform. In that case the most valuable company of the 3 would be the ad platform, because eyeballs matter very little if you can’t turn them into dollar signs.

Finally I believe Facebook is the last hope of the smart marketer to be able to compete with Amazon. Google drives maximum revenue from every search, so they take most of the profit margin out of transactions. But Facebook isn’t about one person doing one search and then having 10 advertisers bid aggressively to show up on the results page. On Facebook I can think of a type of person who might want my product and show it to them before they even know it exists. There really isn’t a discovery platform that compares now or ever in history. If this discovery platform goes away then many upstart and smaller brands will never have a chance to become bigger brands. Google will continue to suck the marrow out of every brand, and Amazon will continue to take share from other retailers as well as Google. The eventual result is a much more dangerous Amazon. Google will still be relevant but Amazon is eating their lunch on ecommerce searches and will continue to do so.

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