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Publishers Decry Facebook's Power As Social Network Generates Traffic

Timemagazine co-owner Marc Benioff last week made news with a call to break up Facebook, the social network with vast global reach.

While a breakup of Facebook would create more competition for consumer attention and digital ad dollars, it's not clear that splitting up the company would diminish its power to influence public opinion. Or drive readership among web publishers.

Benioff, who also is CEO of software firm Salesforce, likened Facebook to cigarettes for having addictive powers and harmful effects on kids.

"Facebook is addictive, it's not good for you, they're after your kids, they're running political ads that aren't true ... and they're also acquiring other companies and co-mingling data those companies have on their users into theirs for more power," he said in an interview with CNN.

Benioff isn't the only media executive who has criticized Facebook. Rupert Murdoch, the News Corp. CEO whose political affiliations are the opposite of Benioff's, also wants to rein in Facebook.

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Murdoch is dependent on the social network's power to drive web traffic. His Fox News website generated more Facebook "engagements" than any other publisher during the third quarter, according to analytics firm NewsWhip.

Those engagements keep people glued to Facebook, which is problematic for publishers that want to monetize their own audiences.

Facebook reportedly is addressing this issue by offering cash payments to publishers whose articles appear in its news section, but it remains to be seen how lucrative that source of revenue will be. 

Facebook's biggest media properties are its main social network, image-sharing app Instagram and the Messenger and WhatsApp messaging platforms. The company is estimated to control about 22% of U.S. digital ad spending; it is even stronger in categories of mobile and social media advertising, according to eMarketer.

One breakup scenario would undo Facebook's $1 billion acquisition of Instagram and the $19 billion takeover of WhatsApp. After several years of rapid growth, each of the companies is worth much more than what Facebook paid for them.

A company breakup likely would compel Instagram and WhatsApp to work even harder to make their apps more addictive amid heightened competition for viewing time.

The platforms also would work to outdo each other with overlapping features.

Instagram would push deeper into messaging, while WhatsApp would expand on its image-sharing and shopping features. A breakup likely wouldn't leave the companies too hobbled to compete, given their massive reach among more than 1 billion people and ability to attract more investment.

However, publishers would benefit from having a bigger selection of distribution channels. Instagram doesn't have a news tab, and groups images into visual themes, like style, décor and beauty.

While the app doesn't let users share links to websites, publishers can link their Instagram Stories -- posts that have several images and disappear after 24 hours -- to their websites to drive traffic. The New York Times, for example, has Stories that let Instagram users swipe upward to visit its website to read related articles.

WhatsApp is focused on encrypted messaging, but has enormous potential to become like WeChat, the Chinese messaging app that acts like a lifestyle hub. WeChat has mini-programs that do everything from making payments to booking travel.

Instead of building out more WhatsApp features, Facebook has added a broader range of functions to Messenger. As a separate company, WhatsApp likely would expand its range of features to give people more choices, while creating a new avenue for publishers to build an audience.

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