What Facebook Would Look Like If It Were Broken Apart

As a standalone company, WhatsApp could have many possibilities, but the value on an earnings and revenue basis without charging similar to a wireless carrier might be a harder business model on a standalone basis.

Facebook’s Messenger platform could theoretically be migrated over to WhatsApp, but unless there was a vindictive or punishing effort to lower the value of the core service, then it would be easy to see how Facebook could argue that the Messenger is an integral function that allows the core-Facebook service (particularly on desktops) to allow direct person-to-person communications. The value of a standalone messenger company at this point would be difficult to derive much upside.

OculusVR was a $2 billion acquisition from 2014 that has future applications within the core Facebook. It also is likely to become more widely used in the coming years as consumer technologies become more powerful and more affordable. That said, Oculus also could fit in nicely with Instagram or WhatsApp, or it could be forced into being its own standalone technology company again.

On its own, OculusVR could partner with any video game and entertainment company, any communications provider and a slew of other applications. After all, virtual reality and augmented reality might not even be 1% of the way to their potential.

Facebook also has several services that regulators could determine need to be plucked away or moved outside of its core. These would include its Pages service, which supports websites of causes and small communities; its Events service that lists movies and local events that others are interested in; and there is the Marketplace that allows users to list for sale items such as cars, homes, clothing, electronics, furniture and all other items in a photo-classifieds format.

The additional services mentioned here could all be bundled into a standalone entity and be required to integrate with other social media and other online companies. Yet, the value here would be very difficult to determine without knowing if these would all be regrouped together or parsed out.

Facebook had a market value of more than $500 billion as of October 9, 2019. It’s nearly impossible to know ahead of time if the sum of the parts would be immediately worth more than the entity as a social and online conglomerate without seeing how the regulatory framework in the United States and abroad ends up. Since the Libra cryptocurrency has not even really begun, we have not assigned any focus or value, and it’s impossible to know where it might land if it was housed or bundled with a noncore spin-off.

As of June 30, 2019, Facebook had more than $48.5 billion in cash and short-term investments and a stated value of $117 billion for all assets (including $18.3 billion in goodwill and another $1 billion in other intangible assets). It had virtually no serious debt at the time, and its total liabilities were $28.2 billion. All those would have to be carved up if Facebook were to be forced to become multiple companies.

One last issue that makes it so hard to predict Facebook’s future outcome goes beyond politics. The biggest issue is that large software, internet and technology companies are also under regulatory scrutiny and no significant break-up or mass regulatory effort has taken shape.