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Here's What's in Store for the US Internet Industry

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Part 15
Here's What's in Store for the US Internet Industry PART 15 OF 20

Facebook Could Get Burned Copying Snapchat’s Features

Eating from a rival’s bowl

Facebook (FB) continues to borrow features from rival Snapchat, whose parent Snap (SNAP) recently went public at a valuation of more than $23.0 billion. The disappearing status update feature that Facebook recently brought to WhatsApp is plucked straight from Snapchat’s playbook.

Facebook Could Get Burned Copying Snapchat&#8217;s Features

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Earlier, Facebook copied the Snapchat Stories features to create Instagram Stories. The same feature seems headed to Facebook’s flagship app (application), which is used by nearly 1.9 billion people around the world. WhatsApp has about ~1.2 billion active monthly users, and Snapchat has about ~300.0 million, as shown in the above graph.

Possible impact of feature copying

The WhatsApp status update supports sharing of rich content, including photos, videos, and GIF (Graphics Interchange Format). Users can also overlay their posts with emojis and drawings, further enhancing the appeal of the app. Before the recent update, WhatsApp was largely a text exchange mobile messaging app.

Facebook’s copying of Snapchat features could be a double-edged sword. It could be perceived by some that Facebook has run out of innovative ideas to create value for its service, resulting in recycling existing features from rivals. But borrowing ideas from Snapchat could also be Facebook’s strategy to frustrate the rival as it battles for control of online advertising budgets.

For instance, given the massive user base of WhatsApp, making Snapchat-like features available to its users erodes Snapchat’s competitive advantage to take subscribers from WhatsApp. Not many people would be interested in leaving WhatsApp for Snapchat if they’ve already tasted the features Snapchat is promising.

$77 billion at stake in the United States

Facebook, Snap, Twitter (TWTR), and Alphabet (GOOGL) are in the race for control of the ~$77.4 billion US (SPY) digital ad spending in 2017. That figure comes from estimates by eMarketer.

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