There’s burgeoning beef between Facebook and the founders of Instagram and WhatsApp, its two most famous and consequential acquisitions.
Earlier this year, WhatsApp founders Brian Acton and Jan Koum left Facebook; later, during the Cambridge Analytica scandal, Acton tweeted “#deleteFacebook.” In his first lengthy interview since his departure, Acton told Forbes that he clashed with Facebook and CEO Mark Zuckerberg about monetizing WhatsApp with advertising and admits that he “sold [his] users’ privacy” by selling the company to Facebook.
“I am a sellout. I acknowledge that,” Acton said.
The interview comes just days after the New York Times reported that Instagram founders Kevin Systrom and Mike Krieger are resigning from the company. The Times reported that they are leaving over differences with Facebook which included being resistant to closer Instagram integration with Facebook.
By leaving Facebook, these founders (especially Acton) are currently being portrayed as rebels who are somehow sticking it to Mark Zuckerberg by belatedly speaking truth-to-power. But they are, as Acton said, sellouts. It's too late to be celebrated as rebels.
America’s obsession with consolidation—turning independent, successful companies into smaller, often disposable parts of much larger ones—is one of the many insidious things about capitalism. Broadly speaking, business consolidation via mergers and acquisitions in a political environment that doesn’t even pretend to care about antitrust has driven down wages, decreased competition, raised prices for consumers, homogenized the news, and resulted in corporate domination over our laws. So Koum and Acton, who sold their company for $22 billion, do not deserve our pity, and they have done nothing to suggest that they will somehow be any more of a check on Facebook’s power outside the company than they were inside it.
Instagram and WhatsApp stopped being autonomous companies/services capable of making decisions independently of Facebook, let alone provide it healthy competition the moment they were sold to Facebook. Under Facebook, Instagram shamelessly ripped off Snapchat’s Stories format, which has had drastic, negative impacts on Snap’s business. WhatsApp and Instagram simply became another cog in Zuckerberg’s everything machine, a means to help it crush any and all comers.
It didn’t have to be this way. The Wall Street Journal reported earlier this year that before being sold to Facebook for $22 billion, WhatsApp was a profitable company that earned money via a sensible, straightforward business model predicated on charging its users a $1 annual fee. Once Facebook acquired it, the company nixed the fee, and now wants to maximize revenue from the app, which has more than 1.5 billion users worldwide. Unsurprisingly, Facebook—an advertising company—wanted to add advertisements to WhatsApp. From Forbes:
“Facebook has one of the world’s biggest advertising networks; Koum and Acton hated ads. Facebook’s added value for advertisers is how much it knows about its users; WhatsApp’s founders were pro-privacy zealots who felt their vaunted encryption had been integral to their nearly unprecedented global growth.”
Acton told Forbes “targeted advertising is what makes me unhappy,” targeted advertising being of course Facebook’s core business and thus an obviously poor fit for WhatsApp.
Acton and Koum became fabulously wealthy by selling out their values and selling out their users. Systrom and Krieger became significantly less so—Facebook’s $1 billion acquisition of Instagram was, in retrospect, an absolute bargain (analysts estimate that Instagram is worth roughly $100 billion today.) But none of these founders should get any credit for belatedly speaking truth-to-power after torpedoing two of the precious few companies capable of actually competing with some of the most powerful companies in the world.
The stereotypical Silicon Valley startup has only two possible successful trajectories: Becoming a “unicorn” worth $1 billion, or securing an “exit” by selling your part of the company to a richer player.
Instagram and WhatsApp were both interesting companies that have had real, quite possibly positive impact on the world. They have instead become bandages to patch over Facebook’s very real flaws, and their founders are and always will be complicit.