US federal and state anti-trust enforcers filed suit
against Facebook on Wednesday claiming the social media giant
abused its dominant position with its acquisitions of messaging
services Instagram and WhatsApp.
Separate suits filed by the Federal Trade Commission and a
coalition of state officials called for the divestment of Instagram
and WhatsApp, services which have billions of users and are part of
the Facebook “family” of applications.
“Facebook’s actions to entrench and maintain its monopoly deny
consumers the benefits of competition,” said Ian Conner, director
of the FTC’s Bureau of Competition.
“Our aim is to roll back Facebook’s anticompetitive conduct and
restore competition so that innovation and free competition can
thrive.”
A separate legal action was filed by state antitrust enforcers
from 48 US states and territories.
“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,” said New York state Attorney
General Letitia James, who leads the coalition.
“Facebook used its power to suppress competition so it could
take advantage of users and make billions by converting personal
data into a cash cow.”
The suits allege Facebook sought to squelch competition by
acquiring the messaging applications — Instagram in 2012 and
WhatsApp in 2014.
The action presages a fierce court battle seeking to force
Facebook to divest the apps which have become an increasingly
important element of the business model of the California giant and
integrated into its technology.
Facebook said it would offer a detailed response after reviewing
the cases but added: “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.”
Data Advantages
The case is likely to hinge not only on Facebook’s share of
social media users but the vast troves of data it collects from
some three billion users worldwide.
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“Facebook has been spending its time surveilling users’ personal
information and profiting from it,” James said.
“No company should have this much unchecked power over our
personal information, and our social interactions.”
Tiffany Li, a Boston University law professor who studies the
sector, said that while Facebook has rivals bidding for internet
users’ attention it has a big advantage because of its access to
data.
“One company owning multiple platforms is not, in itself,
necessarily a bar to competition,” Li said on Twitter.
“However, one company having exclusive ownership of vast amounts
of user data, with no potential for interoperability or access to
competitors, can be anti-competitive.”
Li added that new startups “have an uphill battle to reach users
due to network effects, even if they have better products.”
The FTC announced earlier this year it would review acquisitions
made by five Big Tech firms over the past decade, opening the door
to a wave of potential antitrust investigations.
The consumer protection agency said it would review deals made
by Amazon, Apple, Facebook, Microsoft and Google parent Alphabet
since 2010 amid growing complaints about tech platforms which have
dominated key economic sectors.
The US Justice Department, which shares antitrust enforcement
with the FTC, in October sued Google parent Alphabet, accusing the
Silicon Valley giant of maintaining an “illegal monopoly” in online
search and advertising and opening the door to a potential breakup.
Eleven US states joined that case.
Scrutiny has been increasing for the large tech firms which have
extended their dominance in recent years, including during the
global pandemic as more people turn to internet platforms for goods
and services.
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