Classroom Companion: Business

part of the wider social media market. 
The acquisition—together with the 
Instagram acquisition—has increased 
Facebook’s influence and market 
power in the social media market.
5
Forward vertical integration: Face-
book’s acquisition of Oculus VR in 
2014. Oculus VR was developing 
virtual reality headsets. Such devices 
may extend the reach of Facebook, 
by integrating the social media to 
other types of devices.
5
Backward vertical integration: Face-
book’s acquisition of Parse in 2013. 
Parse was a mobile backend service 
provider. It gave Facebook new tools 
for developing and accessing back-
end systems such as data storage, 
login management, and push notifi-
cations.
Social media
Infrastructur
e
Forwar
d
busines
s
domain
s
Parse
. Fig. 14.3 Facebook acquisitions of Instagram, WhatsApp, Oculus VR, and Parse. 
(Authors’ own figure)
14.3 · Types of Integration

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14
It is easier for the authorities to check that horizontal acquisitions conform to 
antitrust laws and other market regulations than vertical acquisitions. However, 
there is one particular problem associated with regulations also in this case, namely, 
that many of the companies acquired by the large companies are often young and 
small, so that the acquisition is not regarded as a threat against healthy market 
evolution.
Due to the high number of M&A by companies in the digital economy, it is 
important to analyze market structures and, in particular, how these M&As may 
change competition. The role of national regulators and other governing bodies is 
to supervise the market evolution and to avoid the formation of de facto monopo-
lies. The distribution of market shares and revenues is not the only factor determin-
ing whether a company will become a monopoly. The rate of growth of the number 
of users or market share must also be considered. If one company gets the lead in 
a market with strong network effects, then with time, the company may become a 
de facto monopoly.