[adventured]

I think your theory about social networks is completely wrong. All social networks are not the same in terms of the subset they compete in.

Instagram in photos, and WhatsApp in messaging competed with Facebook in a subset of social networking.

All Facebook has to do is acquire winners in the new major subsets that bloom, and then the competition is over for each. It's a perpetually affordable game for FB to play, because each new blooming subset of social networking, is only going to be worth a fraction of the total Facebook corporation.

There has been no new Instagram since Instagram. Facebook + Instagram have in fact prevented any new Instagrams from succeeding, they already won.

It's likely that Facebook picked a winner in WhatsApp as well, at least for the vast majority of the markets they compete in. There will ultimately only be a few major messaging apps that matter, FB bought one of the few winners.

There has been no challenger to Facebook, the core system, in years. They won, it's over. There is no inbound next Friendster or MySpace to attempt to dethrone Facebook.

Where is Path? Where is Ello? (it's losing the little attention it had, that's where) Where is Diaspora? Where are the countless others that have tried? Irrelevant, that's where.

Facebook is worth so much because they have a monopoly in consumer social networking (in a lot of big markets), that is presently worth $3 billion per year in net income, and will probably be worth $6 billion per year within ~36 months.

[btilly]

First it is a truism that every startup starts in a small subset of the market that they will eventually occupy. When Facebook was fighting MySpace, they didn't compete in MySpace's core market. They focused on college campuses. And then expanded. So you would expect to see any new competitor do the same.

Second, the "buy competitors" approach only works as long as competitors are willing to sell. Eventually one won't. Don't forget that Facebook tried to buy Snapchat for $3B in 2013, and failed. Based on emails leaked last year in the Sony fiasco, if they can beat Facebook, they will. And they believe that they have a chance. And if they fail, they won't be the last competitor.

But we'll all get to see what the future holds. You have a theory. I have a theory. Read http://www.businessinsider.com/snapchat-ceo-evan-spiegel-has... for the theory that Snapchat's CEO has. Eventually one of us will be proven right.

[waterlesscloud]

It's an interesting thought that the reason there's no new Instagram is that Facebook left Instagram as its own thing. If they'd fully absorbed the brand, then there would be a sort of vacuum in the category and someone else could come along.

Instead there's Instagram, dominating the niche.

Instagram isn't just not a competitor, they're a whole new line of defense for Facebook.

It was a really smart play.