FTC and States Argue in Court to Break Up Facebook

The Federal Trade Commission, along with 46 states and two territories, has accused Facebook of being a “social networking monopoly” and purchasing competitors, like Instagram and WhatsApp, to maintain their monopoly. The allegations were outlined in a lawsuit filed Wednesday.

“For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users,” New York Attorney General Letitia James said in a statement. “Today, we are taking action to stand up for the millions of consumers and many small businesses that have been harmed by Facebook’s illegal behavior.”

The federal government is asking the courts to force Facebook to sell Instagram and WhatsApp, and wants to require Facebook “to seek prior notice and approval for future mergers and acquisitions,” the FTC wrote in a statement. The FTC’s complaint also alleges that Facebook placed “imposing anticompetitive conditions on access to APIs and data,” citing an instance in 2013 where Facebook prevented Vine from accessing a feature that would allow Vine to view a user’s Facebook friends.

“Facebook’s actions to entrench and maintain its monopoly deny consumers the benefits of competition. Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive,” said Ian Conner, Director of the FTC’s Bureau of Competition.

In another suit filed by 48 states’ attorneys general, they argue that, in addition to acquiring competitors to maintain its monopoly, Facebook has “wide latitude to set the terms for how its users’ private information is collected, used, and protected.” Facebook’s monopoly also leads to weaker privacy protections for users, they allege. In addition to harming users, they say, Facebook’s monopoly also harms advertisers — the platform’s main source of revenue — because there is a lack of transparency “to assess the value [advertisers] receive from advertisements.”

In response to the complaints, Jennifer Newstead, Facebook’s vice president and general counsel, released a statement: “Instagram and WhatsApp became the incredible products they are today because Facebook invested billions of dollars, and years of innovation and expertise, to develop new features and better experiences for the millions who enjoy those products,” she 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.”

Chief Executive Mark Zuckerberg posted to Facebook’s internal social network to refute the charges. “Overall, we disagree with the government’s allegations,” Zuckerberg said, according to CNET. “The reality is that we compete with many other services in everything we do, and we compete fairly.”

In October, the House antitrust subcommittee issued a report that said tech behemoths including Facebook, Google, Amazon and Apple “run the marketplace while also competing in it.” And, CNET reports, federal and state authorities may file an antitrust suit against Google next week.

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