Facebook reportedly dropped a deal to buy competitor Houseparty, the video-focused social media chat app, due to anticipated additional antitrust scrutiny, The New York Times reported on Monday (Aug. 12).
The social media giant was supposedly in talks with Houseparty but in the end decided the acquisition would be too risky. Massive tech companies are coming under increased federal scrutiny and the Federal Trade Commission (FTC) recently launched a new antitrust investigation into Facebook, the paper said.
The Houseparty platform draws youth under 24 and features group video chat. Fortnite maker Epic Games purchased Houseparty in June by for an undisclosed amount.
Facebook’s purchase of WhatsApp and Instagram is now being examined to decide if the acquisitions helped strengthen possible anticompetitive practices, the report said. Facebook Co-Founder and CEO Mark Zuckerberg insists his company has plenty of competition. Facebook was recently fined $5 billion by the FTC in a separate privacy case.
“The big question is, is this a logical business plan?” Gene Kimmelman, a former antitrust official in the Obama administration, told the NYT. Kimmelman is also a senior adviser to Public Knowledge, a nonprofit think tank in Washington. “For a social network with enormous growth in photos and messaging, there’s probably significant business justification for combining the units.”
The FTC’s antitrust investigation is looking into Facebook’s acquisitions to determine whether it bought other companies to prevent them from becoming rivals. The issue of acquisition is paramount to the FTC.
In the meantime, Facebook continues to release new products and services. On July 31, it was reported that the company reached out to Netflix, HBO, Hulu, Disney and Amazon about putting their services on a new streaming device the social media company is planning to launch in the fall. The product, code-named “Catalina,” will have a remote and emulate other streaming peripherals like the Apple TV or Roku.