46 STATES AND FTC FILE ANTITRUST LAWSUITS AGAINST FACEBOOK

Thu 10 December 2020:

The federal government and 46 state attorneys general are suing Facebook, accusing the social media giant of using illegal tactics to maintain its dominance.

The FTC is specifically seeking Facebook divest from messaging app WhatsApp and photo sharing service Instagram. Facebook bought the companies in 2014 and 2012 respectively.

The suit filed by the FTC alleges “Facebook has engaged in a systematic strategy” that involves both acquisitions as well as “the imposition of anticompetitive conditions on software developers—to eliminate threats to its monopoly,” the FTC said in a statement.

“This course of conduct harms competition, leaves consumers with few choices for personal social networking, and deprives advertisers of the benefits of competition,” the agency said.

In addition to the divestitures the lawsuit is seeking to have a judge “prohibit Facebook from imposing anticompetitive conditions on software developers; and require Facebook to seek prior notice and approval for future mergers and acquisitions.”

The Federal Trade Commission filed a parallel lawsuit Wednesday. Both suits are asking the courts to force Facebook to spin off Instagram and WhatsApp, as well as to seek government approval for future mergers.

“For nearly a decade, Facebook used its dominance and monopoly power to crush smaller rivals, at the expense of users,” James said in a press conference on Wednesday. “No company should have this much unchecked power over our personal information and our social interactions.”

Both lawsuits cite Facebook’s 2012 purchase of Instagram for $1 billion and a $19 billion deal for WhatsApp in 2014 as examples of its efforts to eliminate competitors. Those acquisitions of fast-growing but unprofitable startups let Facebook solidify its social media dominance while depriving users of privacy-focused alternatives, prosecutors allege.

The suit seeks to block Facebook from making any additional acquisitions valued at or in excess of $10 million, far below the $1 billion it paid for Instagram and $19 billion that went towards the WhatsApp purchase.

Facebook said it is “reviewing the complaints & will have more to say soon.”

“Years after the FTC cleared our acquisitions, the government now wants a do-over with no regard for the impact that precedent would have on the broader business community or the people who choose our products every day,” it added in a statement posted to Twitter.

Facebook maintains that it became the world’s most widely used social networks by offering a superior product. In a statement, the company’s general counsel, Jennifer Newstead, called the FTC’s allegations “revisionist history” and pointed out that the government body previously cleared Facebook’s purchases of Instagram and WhatsApp.

“Antitrust laws exist to protect consumers and promote innovation, not to punish successful businesses,” the statement said. “The most important fact in this case, which the Commission does not mention in its 53-page complaint, is that it cleared these acquisitions years ago. The government now wants a do-over, sending a chilling warning to American business that no sale is ever final.

People and small businesses don’t choose to use Facebook’s free services and advertising because they have to, they use them because our apps and services deliver the most value. We are going to vigorously defend people’s ability to continue making that choice.”

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