Facebook Inc (FB) doesn’t get threatened very easily. But judging by its recent actions towards one new competitor, it might be intimidated by another upstart social network.
All references to Tsu.co on Facebook were recently removed by the company, which says Tsu’s business model is inherently spammy and FB users don’t like seeing spam all over their news feeds.
One can see how Tsu.co’s business model could encourage some degree of spam: It pays users a portion of its revenues, based on how much the content they post to the website is viewed. It also gives users a portion of the revenues generated by anyone they refer to the site, encouraging users to share to social networks like FB and Twitter (TWTR) to recruit users.
But then again, doesn’t Alphabet‘s (GOOG, GOOGL) YouTube also operate via a similar model? And aren’t YouTube links still allowed on the site? Yes, and yes.
Something Doesn’t Add Up
Do Zuckerberg and his team of coders out in Menlo Park really think Tsu.co represents a threat to Facebook’s business and thus the FB stock price?
After all, it allows links and references to Twitter, Pinterest and other social media rivals like Ello. How much can Tsu.co really threaten FB?
It would be pretty blatantly anticompetitive if Facebook were to block links to the likes of Twitter and Pinterest, and it may also be negative for FB engagement if the company disallowed references to those platforms. And Ello, despite they hype surrounding the company late last year, has seen its traffic stumble.
Tsu.co, however, is just obscure enough for Facebook to blacklist without much blowback. And in recent months, its traffic has been improving. According to Alexa.com, Tsu.co is now the 4,256th most popular domain on the web, up 940 spaces in the last three months. (Fun fact: Tsu.co is the 154th most popular online destination in Pakistan.)
A recent article by Wired examining Facebook’s aggressive Tsu.co policy highlights the issue well:
“Facebook declined to clarify just how it flagged Tsu for spam; why it blocked all links to Tsu.co instead of simply blocking the app; or why it aruges [sic] that Tsu is ‘incentivizing’ sharing but YouTube isn’t. Note, however, that YouTube removed the option to automatically post newly uploaded videos to Facebook in April.”
Bottom Line
In reality, Tsu.co will have to ramp up significantly before it poses any meaningful threat to FB. But if Facebook continues to use its considerable online clout to censor the material users can see on its website, it could one day incite the ire of regulators in much the same way internet service providers did in net neutrality debates.
And that, although it may be a long ways off, would represent a much bigger threat to Facebook, its business, and the FB stock price, than Tsu.co on its own ever could.
As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
