Update: Facebook has illegally acquired competitors Instagram and WhatsApp in a brutal abuse of its monopoly power, suing the FTC in coordination with more than 40 state attorney generals. The lawsuits forced Facebook to divest Instagram and WhatsApp.
The lawsuit alleges that Facebook violated U.S. no-confidence laws to maintain its monopoly on the social media market, from which it made billions of dollars in advertising and profits. They also allege that the company has exercised extensive discretion in setting terms for how it collects personal information of illegal monopolistic users and uses it to advance its business interests – and has allowed Facebook to impose self-contradictory conditions on third-party developers.
“For nearly a decade, Facebook has used its dominance and exclusive power to suppress small competitors and undermine competition, at the expense of everyday users,” said Letia James, New York’s attorney general, who led AG’s initiative to sue Facebook. “Today we are taking steps to stand up for the millions of consumers and many small businesses that have been affected by Facebook’s illegal behavior.”
In a statement, Facebook VP and general consultant Jennifer Newsstate called the lawsuits “revisionist history” and said the FTC had already approved the company’s contracts for Instagram and WhatsApp a few years ago.
“The no-confidence law is not intended to effectively penalize businesses, but to protect consumers and promote innovation,” the Newstead statement said. “Instagram and WhatsApp have become incredible products today because Facebook has invested billions of dollars, and year after year for innovation and efficiency, so that those who enjoy these products can develop millions of new features and better experiences.”
Newsstead added, “The government wants to do something now, sending a warning to cool American business that no sales are final.”
The AG’s lawsuit, filed with the 466 states and attorney generals of the Districts of Colombia and Guam, specifically charged Facebook with multiple violations of Section 7 of the Clayton Act, as well as Section 2 of the Sherman Act.
The FTC lawsuit seeks a standing order to divest or restructure assets, including Instagram and WhatsApp (but not limited to); Prohibits Facebook from imposing anti-captive conditions for software developers; And prior notice and approval of the Company is required for future attachments and acquisitions.
“Personal social networking is at the heart of the lives of millions of Americans,” Ian Connor, director of the FTC’s Bureau of Competition, said in a statement. “Facebook’s move to retain and maintain its monopoly denies customers the advantage of competition. Our goal is to bring back Facebook’s anti-competition and restore competition so that innovation and free competition thrive.”
Mark Zuckerberg, Facebook’s chairman and CEO, saw Instagram as a direct threat shortly after the photo-sharing began in 2010, according to the state AG’s lawsuit. In April 2012, Facebook acquired Instagram for বিল 1 billion, “although none of the company has a percentage of revenue and its own value is only 500 500 million,” according to AG James of New York.
Meanwhile, in 2014, Facebook acquired the mobile messaging app WhatsApp – a similar threat to Facebook’s growth in a ১৯ 19 billion deal that Zuckerberg offered a few months ago and another competitor offered দিয়ে 100 million to buy the company two years ago. Gave, ”according to James.
Critics of the legal action by the FTC and state attorneys say the lawsuits don’t actually hurt consumers – a key value under U.S. no-confidence law – and also assume that Instagram and WhatsApp would have improved if Facebook hadn’t bought them.
“Today’s actions by the Federal Trade Commission and state generals against Facebook are perfect examples of political theater,” said Jessica Melugin, competition associate director at the Center for Technology and Innovation at the Competitive Enterprise Institute (CEI). A free-market think tank. “The bottom line is that over one billion users worldwide have benefited from Facebook’s acquisitions of Instagram and WhatsApp, and it’s clear that the acquisition has done no harm to consumers.”
Consumer-advocacy groups, meanwhile, have praised the incredible litigation.
“Over the years, Facebook has increased its dominance and power by imposing unreasonable conditions on third-party developers by taking emerging companies as a threat to their business,” says Justin Brookman, technology policy director at Customer Reporting. “These actions have limited customer choice, warmed the company from competitive pressures and resulted in a worse online ecosystem. We hope that steps like this will begin to hold technologists like Facebook accountable, limit their ability to communicate and trade online, and strengthen digital rights. “
Some analysts have expressed doubts that the no-confidence lawsuit will succeed in breaking Facebook. Despite Facebook’s alleged anti-defensive behavior, Twitter, Snap (the father of Snapchat) and TickTock have all grown steadily, says Wadebush Securities’ Michael Pachar.
“It’s hard to see how Facebook’s competitive position has become so competitive that it’s beyond competition,” Pachter wrote in a research note. “We doubt that a federal court will be divided and equally skeptical that a divided Congress will pass a law that would force such an outcome.”
Complaints from the FTC and the state AG were filed in U.S. District Court for the District of Columbia in coordination with each other. FTC litigation is available at this link and state attorneys general litigation is at this link.