[skewart]

How would breaking up Facebook into three companies fix this though? Suppose Instagram is a separate company and a new competitor starts getting popular. Why wouldn’t Instagram still just copy the competitor’s features?

It’s hard to compete with Instagram because everyone is already on Instagram, not because everyone is also on Facebook. (A lot of IG users don’t use FB much, and vice versa.) A freestanding Instagram could still easily copy and crush competitors.

[quickresponse]

Because if FB were split in three it would signal a definitive shift towards antitrust regulators actively applying the law. In that reality, all move-the-needle mergers would be subject to antitrust regulations that should have (but weren't really) applied to FB's previous acquisitions thus constraining IG's freedom to copy and crush.

[disgruntledphd2]

I think the only real failure of anti-trust regulation was in the EU. They definitely should not have allowed the Whatsapp acquisition to go ahead.

I'm not sure on what grounds the US regulators would have blocked the Whatsapp acquisition, as it basically had no competition implications in the US.

The Instagram one is harder. Sure, it was a better version fo Facebook done right for mobile, but it only had 10mn users when acquired.

I'm not convinced that IG would have been successful if it hadn't been bought by Facebook. For an example of how things can go wrong, look at Snapchat vs Instagram.