The U.S. government and 48 states and districts sued Facebook on Wednesday, accusing it of abusing its social network market power to crush smaller competitors and seek action that could include a forced spin-off of the social network’s Instagram and WhatsApp messaging services.
The antitrust lawsuits, announced by the Federal Trade Commission and New York Attorney General Letitia James, mark the second major government offensive this year against seemingly immobile technical behaviors. The Justice Department sued Google in October for abusing its dominance in online search and advertising – the government’s main attempt to support competition since its historic target against Microsoft two decades ago. Amazon and Apple have also been under investigation in Congress and by federal authorities for alleged anti-competitive behavior.
James noted at a press conference that “it is really critical that we block this predatory acquisition of companies and that we restore confidence in the market.”
The FTC said that Facebook has engaged in a “systematic strategy” to eliminate its competition, including by buying smaller up-and-coming rivals such as Instagram 2012 and WhatsApp 2014. James reiterated this in his press conference, saying that Facebook “used its monopoly power for to crush smaller rivals and eliminate competition, all at the expense of everyday users. ”
“No company should have so much uncontrolled power”: NY lawyer on Facebook
The FTC fines Facebook $ 5 billion in 2019 for invasions of privacy and introduced new oversight and restrictions on its operations. The fine was the largest agency ever incurred by a technology company, although it had no visible impact on Facebook’s operations.
Facebook called the government’s action “revisionist history” that punishes successful companies and noted that the FTC cleared the Instagram and WhatsApp acquisitions several years ago. “The government now wants to make a transition and send a staggering warning to US companies that no sale is ever final,” said Facebook CEO Jennifer Newstead in a statement outlining the company’s response to a recent antitrust probe at Congress.
Facebook is the world’s largest social network with 2.7 billion users and a company with a market value of almost $ 800 billion whose CEO Mark Zuckerberg is the world’s fifth richest individual and the most public face of Big Tech swagger.
Billionaire’s wealth growth:
Elon Musk: $ 118,500,000,000
Jeff Bezos: $ 71,400,000,000
Mark Zuckerberg: $ 50,100,000,000
Larry Page (Google): $ 28,900,000,000
Sergey Brin (Google): $ 28,500,000,000
MacKenzie Scott: $ 23,800,000,000
At the same time, 54,000,000 Americans are starving. https://t.co/3LZ7tDMSD2
– Public Citizen (@Public_Citizen) December 9, 2020
James claimed that Facebook had a practice of opening its website to third-party app developers and then suddenly shutting down developers they saw as a threat. The lawsuit – which includes 46 states, Guam and the District of Columbia – accuses Facebook of anti-competitive behavior and uses its market dominance to harvest consumer data and reap a fortune in advertising revenue.
North Carolina Attorney General Josh Stein, who was on the executive committee of attorneys general conducting the investigation, said the disputes have the potential to change the communications landscape in the way that the dissolution of AT & T’s telephone service monopoly did in the early 1980s.
“Our hope is to restructure the social networking market in the United States, and right now there is a player,” Stein told reporters. James said the coalition worked with the FTC but noted that lawyers generally conducted their investigation separately.
Antitrust expert Rebecca Allensworth, professor of law at Vanderbilt University, said it was “difficult to win an antitrust lawsuit and this one is no different.” But when it comes to antitrust cases, she added that the government has a strong case.
The Justice Department’s lawsuit against Google, which was announced just two weeks before election day, raised allegations of political motivation from some quarters. It was submitted by a cabinet led by a lawyer who is seen as a close ally of President Donald Trump, who has often criticized Google publicly.
The FTC, on the other hand, is an independent regulator whose five commissioners currently include three Republicans and two Democrats.
Elected President Joe Biden has said that the dissolution of Big Tech giants should be seriously considered. He has denounced Facebook’s Zuckerberg and called him “a real problem.”
Instagram and WhatsApp are among about 70 companies that Facebook has acquired over the past 15 years. But they are the ones who are most often held up by Facebook critics as qualities that should be shared.
Facebook paid $ 1 billion for Instagram, which strengthened the social network’s operations a month before its share was listed on the stock exchange. At that time, the photo sharing app had about 30 million users and generated no revenue. A few years later, Facebook acquired WhatsApp, an encrypted messaging service, for $ 19 billion.
Zuckerberg promised that both companies would be run independently, but over the years, the services have become increasingly integrated. Users can now link accounts and share content across platforms. Instagram now has more than 1 billion users worldwide. Such integration can make it harder for companies to break free.
NetChoice, a Washington-based trade association that includes Facebook as a member, quickly stirred up the mood. The case of antitrust monitoring against Facebook “has never been weaker”, said NetChoice vice president Carl Szabo in a statement, pointing to newer social services such as TikTok and Snapchat as rivals who could “run over” older platforms.
“These lawsuits mark an important turning point in the fight to curb Big Tech monopolies and to revive antitrust oversight,” said Alex Harman, a public policy advocate for Public Citizen, a nonprofit consumer group.