Facebook Warning System Said to Identify, Stamp Out Threats From Startups

Facebook has an internal startup scanning team that identifies promising upcoming tech businesses, sees the threat they potentially pose, and takes measures to counter them early on, according to a report. This internal "early bird" warning system allows Facebook to kill competition early on by aping new features in its product verticals.

The Wall Street Journal reports that Facebook has an internal system whose sole purpose is to identify threats from small companies, and squash them early on. One such company is called Houseparty, a hot group video chat app that is gaining momentum and has caught Facebook's attention. To combat this competition, Facebook is reportedly planning to launch its own app called Bonfire this fall. Bonfire may or may not turn profitable, but it is reported to be a move to squeeze out competition from Houseparty. Notably, Houseparty has been made by the developers of Meerkat, the company that was forced to shut down after Twitter launched its Periscope service and Facebook started its own Live broadcast service.

Facebook has indulged in similar tactics in the past, trying to combat the Snapchat buzz. It aped most of its exclusive features on to all of its products like WhatsApp, Instagram, and even its main app Facebook. Now, WhatsApp Status and Instagram Stories have become more popular than Snapchat in mere months of launch.

The report also states that other companies like Amazon, Microsoft, and Apple also exert the same power over small companies making them difficult to thrive and grow, though Facebook's unique with its aggressive stamp out strategy. Facebook and Google currently account for 20 precent of every ad dollar spent - online and offline - signifying the amount of power both of them together enjoy. The two account for 89 percent of online advertising growth last year, the report states.