Calls to breakup Facebook (FB) are building to a crescendo, bolstered mainly by the idea that the company should offload its two highest profile acquisitions in Instagram and WhatsApp.
Break Up Big Tech
The noisy criticism has likely been most pointed from presidential hopeful Elizabeth Warren, who went to the length of putting up billboards in San Francisco asking to break up big tech and authoring blog posts outlining her aims.
"Current antitrust laws empower federal regulators to break up mergers that reduce competition," she said. "I will appoint regulators who are committed to using existing tools to unwind anti-competitive mergers, including...Facebook: WhatsApp, Instagram."
She chastised regulators for "waving through" the blockbuster deals for Facebook, citing their anti-competitive nature and privacy problems as key sticking points. Warren added that the size of businesses like Facebook and Amazon (AMZN) allow them to act more on par with governments, rather than businesses operating under the jurisdiction of governments.
That line of critique was echoed by Facebook's own co-founder, Chris Hughes, who criticized the overarching power of its chief executive Mark Zuckerberg in an op-ed in the New York Times.
"The FTC's biggest mistake was to allow Facebook to acquire Instagram and WhatsApp," he wrote. "In 2012, the newer platforms were nipping at Facebook's heels because they had been built for the smartphone, where Facebook was still struggling to gain traction. Mark responded by buying them, and the FTC approved."
Hughes added that recent concessions made by Facebook are simply not enough and the proposals for increased regulation ring hollow, especially as Zuckerberg retains a stranglehold on the company via its dual-class structure.
"I don't think these proposals were made in bad faith," Hughes said, "but I do think they're an attempt to head off the argument that regulators need to go further and break up the company. Facebook isn't afraid of a few more rules. It's afraid of an antitrust case and of the kind of accountability that real government oversight would bring."
His argument certainly holds water as analysts across financial firms have called Instagram the true engine of growth at the company as user activity appears to plateau on the flagship platform, especially as the company invests in shopping additions to the subsidiary.
"We see the near-term bull case supported by improving monetization of Instagram Stories and the eCommerce opportunity, particularly when the company opens up Instagram Checkout from beta," Deutsche Bank analyst Lloyd Walmsley said in a recent review of the company.
If Instagram is taken out of the equation, that could stop the bull case in its tracks.
Scale for Solutions
However, insiders at the company are beginning to argue that legislators should be careful what they wish for.
Facebook's recently installed head of Instagram Adam Mosseri said that breaking up the company would only increase nefarious action, rather than counteract it, during a recent conference,
"Personally, if we split it off, it might make a lot of my life easier, and it would probably be beneficial for me as an individual. But I just think it's a terrible idea," Mosseri said at Recode's Code Conference just one week ago. "If you're trying to solve election integrity, if you're trying to approach content issues like hate speech, and you split us off, it would just make it exponentially more difficult - particularly for us at Instagram - to keep us safe."
He explained that security and content teams are integrated across Facebook's current ecosystem and cutting off the parent from its child would leave it orphaned without a guardian.
His colleague, vice president of augmented reality Andrew Bosworth, added that the economy of scale Facebook provides is the best safeguard against malicious activity.
Of course, this might appear to be a secondary problem to Facebook's social media overreach for many critics, which begs the question as to whether the warning will be effective.
The survival of not only Facebook's bull case, but the safety of Instagram appear to hinge upon it.