Meta never bought monopoly power, it just discovered the future

“That’s the dumbest thing I’ve ever heard – and you’ll never be heard from again.” That’s what Michael Ovitch, long known as the most powerful man in Hollywood, told Barry Diller when the former head of Paramount and Fox briefed Ovitch on his next move in the business.

It was the early 1990s, and Diller felt the future was in screens “interacting with customers.” Diller sought and obtained control of the Home Shopping Network. The media guys were stunned!

Diller’s time in the proverbial wilderness rates pondered as you read this, and ponder the meaning of the FTC’s dismissal of the case against Meta. The FTC filed a lawsuit against Meta on December 8, 2020 based on Meta’s previous purchases of Instagram ($1 billion) and WhatsApp ($19 billion) in 2012 and 2014 respectively. But if there were strong indications in 2012 and 2014 that Meta was buying monopoly power, then the latter would have been revealed through exponentially higher prices for both Instagram and WhatsApp. It really is that simple.

That both could be bought for a fraction of what they’re worth today is all the evidence we need that unlike the market for monopoly control of the social media sector, Meta (Facebook at the time) was taking a significant, possibly existential, risk with its purchases. Leaps into the future are expensive and shareholders not infrequently revolt if they are wrong.

Which brings us to Meta’s share price 15 and 13 years ago. It was higher in November 2012 (it closed the month at $28) than it was after the purchase of Instagram ($26.81) in December 2012. As for WhatsApp, Meta shares fell by $1 a month after the purchase and $10 the following month. The markets are a look ahead, but as evidenced by the movement in Meta’s share price after it added Instagram and WhatsApp to its suite of free offerings for users, none of the investors were impressed.

It’s a reminder that it took a long time in the information-pregnant market for Facebook’s vision to pay off. Which says

The critical truth revealed through Meta’s share price is that Facebook could not have known it was buying monopoly power, let alone businesses that would subsequently be worth more than their purchase price simply because no one knew. In business, tomorrow is another century. Something that also calls for thought as this opinion piece draws to a close.

It was on November 30, 2022 that a little-known (at least to the public) non-profit organization called OpenAI launched ChatGPT and in doing so profoundly changed the present and future of Silicon Valley. Since then, Meta, once considered a “monopoly,” has invested hundreds of billions in a frantic effort to reinvent an ever-changing future based on developments in the present.

It’s another reminder that there are no monopoly markets per se in Silicon Valley. There is simply investing in an ever-changing future that is impossible to accurately predict. This truth appears to have informed the court process in the dismissal of the FTC’s lawsuit against Meta.

Back to Ovitch and Diller, somewhere nodding their heads. As silly as Diller’s acquisition of HSN seemed at the time, it turned out to be a vehicle for him to become a billionaire Internet entrepreneur through 155 different transactions over the years, where the much-despised HSN became the much-respected IAC, or InterActiveCorp.

Once ridiculed for a while, the Dealer is now lionized. In our dynamic economy there is no buying power or “monopoly”, there are just fearless leaps into the future. This is what Meta successfully did in a risky way, hence the wise dismissal of the FTC lawsuit.