Facebook Inc (NASDAQ:FB) may have some questions to answer after an article published in althingsD earlier today. A representative of a company offering a competing service has alleged that Facebook used its considerable power, in recent days, to restrict the company’s ability to gather users from the social networking site.
Tom Kathis of Voxer, a voice and messaging service, told althingsD that he was contacted by a Facebook Inc (NASDAQ:FB) representative yesterday, and conversed with them over concerns about competition. The result of the conversation was the cutting off of Voxer from the social graph on Facebook.
After 10.1% Return In 2020, Mohnish Pabrai Changes Strategy [2020 Letter]
Mohnish Pabrai's flagship hedge fund, the Pabrai Investment Fund II, returned 29.6% in the second half of 2020. Following this performance, the fund returned 10.1% net for the year, underperforming the S&P 500 but outperforming the Dow Jones Industrial Average, which returned just 9.7%. According to a copy of the investment manager's year-end letter to Read More
Facebook Inc (NASDAQ:FB) recently began offering free calling and messaging from its iPhone app, in direct competition with Voxer’s service. There seems to be some connection with the Facebook launch of this service, which occurred this week, and the restrictions on Voxer. It is unclear whether or not other companies in similar lines of business were also affected by the change.
Apparently, the Facebook representative’s call to Kathis on Thursday was the first clue that anything of the sort would happen. Calls between his company and Facebook Inc (NASDAQ:FB) representatives had been cordial in the past, according to the executive, hinting that the tone of this particular exchange was not so.
Facebook Inc (NASDAQ:FB) said that the reason behind their move was a violation of their terms of service, that might be so, but it is clearly having a negative effect on the business of a company trying to directly compete with them, at least in a single market. One wonders if Google Inc (NASDAQ:GOOG) has access to its social graph. Facebook Inc certainly has access to Google Trends.
This may be a mistake, and it may be treated as one by Facebook reps if the media gets hold of it and highlights it as an overreach. A recent long running investigation into the activities of Google Inc (NASDAQ:GOOG) found that the firm did not leverage its business unfairly.
Facebook Inc (NASDAQ:FB) operates behind the kind of closed wall that allows them to decide what kind of access each user gets. The company may have done that in this case, and it may not be illegal for it to do so, no antitrust case into the activities of Facebook has been brought up, to my knowledge.
If Facebook is found to have purposefully restricted the access a competitor to products it allows all other users to access, this could be a problem, and it could be one so embedded in Facebook’s culture that it is impossible to wring out. As much as it is about connection, Facebook is about exclusion.
To the people at Voxer, this won’t matter much, according to the CEO. Only about one third of the firm’s users log on using Facebook, and they show the same amount of engagement with the service as users who do not. The trend this incident might imply in Facebook service practice will be an interesting one.