With more than 2.6 billion daily users, it is clear that Facebook (NASDAQ: FB) reaches many people around the world on Facebook, Messenger, Instagram and WhatsApp. With growing influence, what would that mean for the technological actions if the regulators scrutinize more its practices and its rise in power?

Corinne Cardina, Head of the Health and Cannabis Bureau at Fool.com, spoke with Nick Sciple, Head of the Technology, Energy and Industry Bureau, during a fool live episode recorded on February 11 about a quote from Peter Thiel, one of Facebook’s early investors, on how tech companies try to manage the perception of their power by the public and regulators.

Corinne Cardine: Let’s talk about the power of Facebook, of antitrust. It’s been a big topic for a lot of these big tech companies. Nick, can you tell us, Facebook isn’t just Facebook, it’s Instagram, it’s WhatsApp, it’s Facebook Messenger, and it’s all about advertising. Tell us a bit about Facebook as such, is it a monopoly? Is it a duopoly? Tell me about it.

Nick Sciple: It’s a good question. We can discuss whether Facebook is a monopoly or not. It clearly depends on how you define the market. I think there are a few quotes that I think might be interesting to illustrate this. If you go to Facebook’s 10-K, which just came out, their fourth quarter results were released fairly recently, so 10-K came out, I think, at the end of January. They state, “We face significant competition in all aspects of our business, including, but not limited to, businesses that facilitate the ability of users to share, communicate and discover content and information online. or allow marketers to reach their existing or potential audiences. “Basically what they’re saying is anyone who sells ads is a potential competitor for us. The reason I find this quote super interesting is because Peter Thiel, a very famous investor, was actually the very first outside investor on facebook, is on the board of facebook, has a fantastic book, which i think every investor should read, titled Zero to one. One of the things he talks about in this book is that people who have monopolies pretend they don’t, they do things like what Facebook just said. They’ll basically say, and that’s because you don’t want to be regulated by the government, that you don’t want the government to come after you, so you’re never going to say you’re a monopoly. Anyone with a monopoly will claim that this is incredible competition, which I think is the same sort of thing you see in this quote I took from 10-K. Depending on how you want to define it, obviously [Alphabet‘s] Google (NASDAQ: GOOGL)(NASDAQ: GOOG) is a major competitor, Pinterest (NYSE: PINS), some of these other platforms challenge Facebook, but just to give you a few figures, people active on a daily basis as a family is the number that Facebook discloses on all its platforms. These are complex algorithms to match users, to match that Facebook account and that Instagram account. But in any case, it’s a measure of users across their platforms; Facebook, Messenger, WhatsApp and Instagram every day. In the most recent quarter, the number of daily active people averaged 2.6 billion as of December 2020, up 15% year-over-year. I pulled some numbers last night, just to give you a bit of context, there are 7.7 billion people in the world, about 4.7 billion people have an internet connection, 2.6 billion of those 4.7 billion people have an Internet connection, obviously these are all estimates, but about 2.6 billion of those people spend time on one of Facebook’s properties every day. It just means that when more than half of the people who have the ability to access the internet, at least from the data we get, spend time on Facebook on a daily basis, they really have a strong position in the market. Antitrust investigations are underway. These focus more on Instagram acquisitions and other acquisitions in the past. We will see what happens with these cases. I think a big question with Facebook, across the board, is that they’re off the map. They’re off the antitrust map. Historically, we might not have to apply antitrust laws the way we speak. Instagram had four employees or something, when they acquired them. This idea that it is an anti-competitive acquisition, we are in a brave new world. They are on the other side. You mentioned earlier about privacy issues and what should they do and how should they use their market power to control this? We are also in a brave new world. The field of privacy protection is evolving, it is very different in the world. Different jurisdictions take different approaches. I think what we can say for sure is that Facebook is very, very important. A huge number of people around the world spend time on Facebook on a daily basis, get information there, find meaning through groups, and so on. With that size and that market power, there’s an obligation to regulate or whatever. What these obligations are and what they will look like in the future, we do not know and we are still in the process of determining. I think if you read their 10-K it’s basically paragraph after paragraph it might change, this regulation is new etc. From my point of view, as an investor, I think whatever happens on the regulatory side, this idea that people spend meaningful time on Facebook every day and use it for all of these things. in the real world I just described, I don’t think it’s going to go away. I think Facebook is going to become, and all of their properties are going to be important to the world in the future. It is a question of knowing in which box the regulators put them? This is a big question mark to which we do not yet know the answer.