Author Topic: FB - Facebook  (Read 249948 times)

cameronfen

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Re: FB - Facebook
« Reply #990 on: March 17, 2019, 07:32:55 AM »
IMO one of the issues here is the tone deafness of the CEO.  The US has historically broken up monopolies and the longer that FB has great economics, does things like combine platforms & flexes its power muscles, the more it looks like & smells like a monopoly.  I think this will happen overseas first.  This is not reflected in the price.  Under this scenario, FB, Instagram & What's App would compete with each other & reduce the margins of all three.  I do not think this scenario is priced into the stock at all.  Part of the issue is the lack of anti-trust enforcement over the past 30 years but to be fair there have been no sustained economics like FB or Google over that time period also.  The other issue with FB is the question of whether its social network belongs to FB, its users or the local government.  IMO FB is trying to expand from a technology provider (which most are comfortable with) to a social network owner (which IMO most are not comfortable with).   Now this break-up may not happen next year but the longer the monopoly economics persist, the higher the probability of a break-up.  If the economic deteriorates then a break-up will not occur but I also think this is also not in the stock price.  Just my 2 cents.

Packer

I probably should consider this.  I know your post is mostly speculation but if you had to guess how likely do you think this will happen (approximately)/when will this happen? I'm not sure I can put a number on this and would like to update the risk of FB. 


John Hjorth

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Re: FB - Facebook
« Reply #991 on: March 17, 2019, 07:52:36 AM »
... I think this will happen overseas first.  ...

For everyone interested or invested in Facebook I would recommend to keep a close eye on the activities of Competition Commissioner Margrethe Vestager.

Disclosure : The content of this post is biased.
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wisowis

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Re: FB - Facebook
« Reply #992 on: March 17, 2019, 09:54:01 AM »
Other tech companies (Google, Microsoft, Amazon) all seem like bigger monopolies to me than Facebook. Facebook isn't even the leader in digital ads.

Granted, in tandem with all the other bad press, it probably still is a risk.

Packer16

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Re: FB - Facebook
« Reply #993 on: March 17, 2019, 10:04:56 AM »
IMO one of the issues here is the tone deafness of the CEO.  The US has historically broken up monopolies and the longer that FB has great economics, does things like combine platforms & flexes its power muscles, the more it looks like & smells like a monopoly.  I think this will happen overseas first.  This is not reflected in the price.  Under this scenario, FB, Instagram & What's App would compete with each other & reduce the margins of all three.  I do not think this scenario is priced into the stock at all.  Part of the issue is the lack of anti-trust enforcement over the past 30 years but to be fair there have been no sustained economics like FB or Google over that time period also.  The other issue with FB is the question of whether its social network belongs to FB, its users or the local government.  IMO FB is trying to expand from a technology provider (which most are comfortable with) to a social network owner (which IMO most are not comfortable with).   Now this break-up may not happen next year but the longer the monopoly economics persist, the higher the probability of a break-up.  If the economic deteriorates then a break-up will not occur but I also think this is also not in the stock price.  Just my 2 cents.

Packer

I probably should consider this.  I know your post is mostly speculation but if you had to guess how likely do you think this will happen (approximately)/when will this happen? I'm not sure I can put a number on this and would like to update the risk of FB.

I do not know for certain that it will or will not happen.  At this point I would probably put a barn door guess of 10 to 25% on it.  The longer the profitability stays high, the advertising CPMs continue to rise and the CEO acts like he doesn't know what is going on (i.e. publicly proclaiming he is going to develop a monopoly by integrating FB, Instagram & What's Ap) then higher the probability it will occur either in Asia, Europe or here.  If competition can drive CPMs down, then this will probably not happen but then the profitability would be impinged anyhow.

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shalab

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Re: FB - Facebook
« Reply #994 on: March 17, 2019, 11:23:43 AM »
FB break-up won't happen. There is wechat, viber and a host of other competitors from around the world. The game has changed since the 2000's when the last big anti-trust action against Microsoft.

EU is a fee collecting body, they find US companies easy to target to reduce the burden on their own governments. (ala brexit). I think applying fines on US companies was easy with prior administrations but can have unpredictable consequences with the current one. There are several areas where the tariffs are asymmetric to EU's advantage, and there are non tariff barriers for USA goods/services.

IMO one of the issues here is the tone deafness of the CEO.  The US has historically broken up monopolies and the longer that FB has great economics, does things like combine platforms & flexes its power muscles, the more it looks like & smells like a monopoly.  I think this will happen overseas first.  This is not reflected in the price.  Under this scenario, FB, Instagram & What's App would compete with each other & reduce the margins of all three.  I do not think this scenario is priced into the stock at all.  Part of the issue is the lack of anti-trust enforcement over the past 30 years but to be fair there have been no sustained economics like FB or Google over that time period also.  The other issue with FB is the question of whether its social network belongs to FB, its users or the local government.  IMO FB is trying to expand from a technology provider (which most are comfortable with) to a social network owner (which IMO most are not comfortable with).   Now this break-up may not happen next year but the longer the monopoly economics persist, the higher the probability of a break-up.  If the economic deteriorates then a break-up will not occur but I also think this is also not in the stock price.  Just my 2 cents.

Packer

I probably should consider this.  I know your post is mostly speculation but if you had to guess how likely do you think this will happen (approximately)/when will this happen? I'm not sure I can put a number on this and would like to update the risk of FB.

I do not know for certain that it will or will not happen.  At this point I would probably put a barn door guess of 10 to 25% on it.  The longer the profitability stays high, the advertising CPMs continue to rise and the CEO acts like he doesn't know what is going on (i.e. publicly proclaiming he is going to develop a monopoly by integrating FB, Instagram & What's Ap) then higher the probability it will occur either in Asia, Europe or here.  If competition can drive CPMs down, then this will probably not happen but then the profitability would be impinged anyhow.

Packer

Spekulatius

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Re: FB - Facebook
« Reply #995 on: March 17, 2019, 04:06:16 PM »
FB break-up won't happen. There is wechat, viber and a host of other competitors from around the world. The game has changed since the 2000's when the last big anti-trust action against Microsoft.

EU is a fee collecting body, they find US companies easy to target to reduce the burden on their own governments. (ala brexit). I think applying fines on US companies was easy with prior administrations but can have unpredictable consequences with the current one. There are several areas where the tariffs are asymmetric to EU's advantage, and there are non tariff barriers for USA goods/services.

IMO one of the issues here is the tone deafness of the CEO.  The US has historically broken up monopolies and the longer that FB has great economics, does things like combine platforms & flexes its power muscles, the more it looks like & smells like a monopoly.  I think this will happen overseas first.  This is not reflected in the price.  Under this scenario, FB, Instagram & What's App would compete with each other & reduce the margins of all three.  I do not think this scenario is priced into the stock at all.  Part of the issue is the lack of anti-trust enforcement over the past 30 years but to be fair there have been no sustained economics like FB or Google over that time period also.  The other issue with FB is the question of whether its social network belongs to FB, its users or the local government.  IMO FB is trying to expand from a technology provider (which most are comfortable with) to a social network owner (which IMO most are not comfortable with).   Now this break-up may not happen next year but the longer the monopoly economics persist, the higher the probability of a break-up.  If the economic deteriorates then a break-up will not occur but I also think this is also not in the stock price.  Just my 2 cents.

Packer

I probably should consider this.  I know your post is mostly speculation but if you had to guess how likely do you think this will happen (approximately)/when will this happen? I'm not sure I can put a number on this and would like to update the risk of FB.

I do not know for certain that it will or will not happen.  At this point I would probably put a barn door guess of 10 to 25% on it.  The longer the profitability stays high, the advertising CPMs continue to rise and the CEO acts like he doesn't know what is going on (i.e. publicly proclaiming he is going to develop a monopoly by integrating FB, Instagram & What's Ap) then higher the probability it will occur either in Asia, Europe or here.  If competition can drive CPMs down, then this will probably not happen but then the profitability would be impinged anyhow.

Packer

2 things to consider regarding the EU:

1) The EU has a collection of laws governing the use of data, the US is one of the few countries that doesn’t. I believe that the US tech companies and probably others have broken the intend of the law and I think this will lead to changes, but probably not breakups of companies.

2) The tax rates that the US tech companies pay in the EU (and the US for that matter) are egregiously low. As these companies will become a larger part of the economy, the EU has to do something about this (and in my opinion the US government as well).

3) FB is more vulernable to antitrust than GOOG, imo. FB has the vision of having a collection of social media properties being run with the same ad engine and probably consolidate the data in one warehouse. It’s a bit of a big brother vision. There could be an issue if the EU for example demands compartmentalization if the data. GOOG is more like a holding of various internet properties and if those were individual Spun off, the sum of them may be worth more than the whole company is worth now.
« Last Edit: March 17, 2019, 07:13:15 PM by Spekulatius »
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shalab

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Re: FB - Facebook
« Reply #996 on: March 17, 2019, 04:24:46 PM »
Your points are valid regarding EU and the data protection rules.

EU is a body dominated by Germany (after Brexit) and all other countries are weak(France, Italy, Spain) or smaller (Austria, Netherlands, Sweden, Denmark) economies. Germany has declining population and is very much export driven. Germany will have to pay for all these other countries. USA has been paying for their defense as part of NATO. So applying fines on American companies was the easy way out for them but not clear how long they can continue this.

In USA also, most of the big tech pays very little tax. MSFT for example books all software sales from Peurto Rico and avoids federal income taxes. Income from Peurto Rico is not subject to federal income tax. Pabrai also incorporated his company in Peurto Rico for this reason.


FB break-up won't happen. There is wechat, viber and a host of other competitors from around the world. The game has changed since the 2000's when the last big anti-trust action against Microsoft.

EU is a fee collecting body, they find US companies easy to target to reduce the burden on their own governments. (ala brexit). I think applying fines on US companies was easy with prior administrations but can have unpredictable consequences with the current one. There are several areas where the tariffs are asymmetric to EU's advantage, and there are non tariff barriers for USA goods/services.

IMO one of the issues here is the tone deafness of the CEO.  The US has historically broken up monopolies and the longer that FB has great economics, does things like combine platforms & flexes its power muscles, the more it looks like & smells like a monopoly.  I think this will happen overseas first.  This is not reflected in the price.  Under this scenario, FB, Instagram & What's App would compete with each other & reduce the margins of all three.  I do not think this scenario is priced into the stock at all.  Part of the issue is the lack of anti-trust enforcement over the past 30 years but to be fair there have been no sustained economics like FB or Google over that time period also.  The other issue with FB is the question of whether its social network belongs to FB, its users or the local government.  IMO FB is trying to expand from a technology provider (which most are comfortable with) to a social network owner (which IMO most are not comfortable with).   Now this break-up may not happen next year but the longer the monopoly economics persist, the higher the probability of a break-up.  If the economic deteriorates then a break-up will not occur but I also think this is also not in the stock price.  Just my 2 cents.

Packer

I probably should consider this.  I know your post is mostly speculation but if you had to guess how likely do you think this will happen (approximately)/when will this happen? I'm not sure I can put a number on this and would like to update the risk of FB.

I do not know for certain that it will or will not happen.  At this point I would probably put a barn door guess of 10 to 25% on it.  The longer the profitability stays high, the advertising CPMs continue to rise and the CEO acts like he doesn't know what is going on (i.e. publicly proclaiming he is going to develop a monopoly by integrating FB, Instagram & What's Ap) then higher the probability it will occur either in Asia, Europe or here.  If competition can drive CPMs down, then this will probably not happen but then the profitability would be impinged anyhow.

Packer

2 things to consider regarding the EU:

1) The EU has a collection of laws governing the use of data, the US is one of the few countries that doesn’t. I believe that the US tech companies and probably others have broken the intend of the law and I think this will lead to changes, but probably not breakups of companies.

2) The tax rates that the US tech companies pay in the EU (and the US for that matter) are egregiously low. As these companies will become a larger part of the economy, the EU has to do something about this (and in my opinion the US government as well).

3) FB is more vulernable to antitrust than GOOG, imo. FB has the vision of having a collection of social media properties being run with the same ad engine and probably consolidate the data in 9ne warehouse. It’s a bit of a big brother vision. There could be an issue if the EU for example demands compartmentalization if the data. GOOG is more like a holding of various internet properties and if those were individual Spun off, the sum of them may be worth more than the whole company is worth now.
« Last Edit: March 17, 2019, 04:45:27 PM by shalab »

wisowis

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Re: FB - Facebook
« Reply #997 on: March 17, 2019, 04:36:36 PM »
Quote

2 things to consider regarding the EU:

1) The EU has a collection of laws governing the use of data, the US is one of the few countries that doesn’t. I believe that the US tech companies and probably others have broken the intend of the law and I think this will lead to changes, but probably not breakups of companies.

2) The tax rates that the US tech companies pay in the EU (and the US for that matter) are egregiously low. As these companies will become a larger part of the economy, the EU has to do something about this (and in my opinion the US government as well).

3) FB is more vulernable to antitrust than GOOG, imo. FB has the vision of having a collection of social media properties being run with the same ad engine and probably consolidate the data in 9ne warehouse. It’s a bit of a big brother vision. There could be an issue if the EU for example demands compartmentalization if the data. GOOG is more like a holding of various internet properties and if those were individual Spun off, the sum of them may be worth more than the whole company is worth now.

You use your Android phone (GOOG), boot up your Chrome browser (GOOG), to search for a new restaurant in google search (GOOG), read the reviews and get directions on google maps (GOOG), email your friends to meet you there on gmail (GOOG) and a self-driving Waymo car picks you up to bring you there (GOOG) and a buddy even books a flight to come join you from google flights (GOOG).

All integrated with the google ad engine, which is >2x the size of Facebook's.

I am not sure which is actually more vulnerable, but I think that it should be Google.

cameronfen

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Re: FB - Facebook
« Reply #998 on: March 17, 2019, 06:03:39 PM »
FB break-up won't happen. There is wechat, viber and a host of other competitors from around the world. The game has changed since the 2000's when the last big anti-trust action against Microsoft.

EU is a fee collecting body, they find US companies easy to target to reduce the burden on their own governments. (ala brexit). I think applying fines on US companies was easy with prior administrations but can have unpredictable consequences with the current one. There are several areas where the tariffs are asymmetric to EU's advantage, and there are non tariff barriers for USA goods/services.

IMO one of the issues here is the tone deafness of the CEO.  The US has historically broken up monopolies and the longer that FB has great economics, does things like combine platforms & flexes its power muscles, the more it looks like & smells like a monopoly.  I think this will happen overseas first.  This is not reflected in the price.  Under this scenario, FB, Instagram & What's App would compete with each other & reduce the margins of all three.  I do not think this scenario is priced into the stock at all.  Part of the issue is the lack of anti-trust enforcement over the past 30 years but to be fair there have been no sustained economics like FB or Google over that time period also.  The other issue with FB is the question of whether its social network belongs to FB, its users or the local government.  IMO FB is trying to expand from a technology provider (which most are comfortable with) to a social network owner (which IMO most are not comfortable with).   Now this break-up may not happen next year but the longer the monopoly economics persist, the higher the probability of a break-up.  If the economic deteriorates then a break-up will not occur but I also think this is also not in the stock price.  Just my 2 cents.

Packer

I probably should consider this.  I know your post is mostly speculation but if you had to guess how likely do you think this will happen (approximately)/when will this happen? I'm not sure I can put a number on this and would like to update the risk of FB.

I do not know for certain that it will or will not happen.  At this point I would probably put a barn door guess of 10 to 25% on it.  The longer the profitability stays high, the advertising CPMs continue to rise and the CEO acts like he doesn't know what is going on (i.e. publicly proclaiming he is going to develop a monopoly by integrating FB, Instagram & What's Ap) then higher the probability it will occur either in Asia, Europe or here.  If competition can drive CPMs down, then this will probably not happen but then the profitability would be impinged anyhow.

Packer

I dont believe a breakup will happen either but I wanted to hear packers thoughts.  That being said I got this half an hour after Packer started this (see attachment) whole discussion. 

Packer16

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Re: FB - Facebook
« Reply #999 on: March 17, 2019, 06:33:04 PM »
To be clear at this point I do not think FB will be broken up but I think the way to think about this is in probabilities.  The scenario for break-up has facts supporting it, namely, the increase in CPMs and the purchasing of competitors to reduce competition.  The uncertainty today is how will FB perform going forward.  If it continues to do better & its market power grows, break-up & anti-trust will be in its future.  Since this how the US has dealt with these issues in the past.  If CPMs decline & the market becomes more competitive then FB will remain unchanged. 

The other aspect about FB versus Amazon is that FB is playing in sandboxes outside of commerce like politics which a social network by nature is a pert of.  This increases FB visibility & power in area that puts it in opposition to politicians, a losing proposition IMO.  I also have a question if the FB model of owning the social network versus being a technology provider is sustainable given the scope of a social network is larger than commerce.  This is why FB is in the news & will continue to be as it is more than technology provider.   

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