Typically, regulators challenge mergers when they give a company a big share of an established market. That was not the case when Facebook paid $1 billion for Instagram, a start-up with 13 employees in an emerging field.
Instead, the three argue, the strategy was to buy out budding threats. “We think that’s the better perspective of what was going on — maintenance of monopoly in the social network market,” Mr. Hemphill said.
In Facebook’s case, Mr. Wu said, “the remedy is straightforward: Unwind the acquisitions.”
But an issue in spinning off a unit like Instagram is whether doing so enhances competition. Would a stand-alone Instagram be a real rival to Facebook, or would consumers simply stay with the dominant social network, Facebook, and Instagram suffer?
A New Tech Watchdog
Getting breakups approved by the nation’s courts, which are generally conservative on economic matters, would be a stretch. Besides, some experts argue, a more comprehensive way to police the big tech companies would be with a beefed-up force of regulators.