Dozens of State's AGs and my former employer, the FTC, claim that breaking up Facebook, Instagram and WhatsApp is in the social interest. Common ownership of these multiple social media platforms is said to stifle competition. But are these platforms substitutes or complements?
How do they compete? Users pay nothing; advertisers pay to reach these consumers. The job of these two-sided platforms is to package groups of users to potential advertisers. Who uses the platforms and how they use them differ across users. Advertisers, seeking ever narrower customer niches, benefit from their ability to target the distinctiveness of each platform. A commonly owned FB/Insta/WhatsApp has an incentive to maintain these distinctions. Competing platforms would tend to position themselves to "steal" users from each other by seeking a product position with more in common with rivals (and could fail by doing so). Even for users on all three platforms, their use of one over another for a specific task could indicate to potential advertisers that they are more receptive to the ad message. And consumers benefit both from platform variety and from being better targeted in ads. Of the over 200 social networking services, the ones that seem to succeed do so by differentiating themselves and appealing to niche audiences.
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