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Facebook Sued By Federal Government And States For Anti-Competitive Behavior

The Federal Trade Commission is looking to break up Facebook with a permanent injunction. The injunction will require the company to divest assets.

“Personal social networking is central to the lives of millions Americans,” FTC’s Bureau of Competition Ian Conner said in a statement. “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.”

In 2012, Facebook bought Instagram for $1 billion and Whatsapp for $19 billion. The lawsuit targets Facebook’s acquisition of Instagram and Whatsapp. It comes after Attorney General Letitia James and her office partnered with a group of attorneys to investigate Facebook’s anti-competitive practices.

“For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition,” James said at a press conference. “By using its vast troves of data and money, Facebook has squashed or hindered what the company perceived to be potential threats.”

The lawsuit states that future acquisitions worth $10 million or more should be sent through notifications to state officials.

“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,” Jennifer Newstead, VP, and General Counsel at Facebook, said in a statement, reported by CNN. “The government now wants a do-over, sending a chilling warning to American business that no sale is ever final.”

William Kovacic, a former chairman of the FTC, said that “regulators may not have opposed Whatsapp and Instagram deals at the time, but competition watchdogs have every right to change their minds in light of new evidence.”

US lawmakers and legal experts question whether Mark Zuckerberg got rid of competition by “gobbling them up” through their acquisitions and massive audience.

Facebook believes cracking down on them too hard will give a competitive edge to countries like China in the technology sector. Facebook is the second global tech company to be taken to court by US and state government. The Justice Department and 11 states filed a lawsuit against Google in October for antitrust concerns, alleging that the company used anticompetitive tactics to stifle competition.

Hal Singer, an economist and antitrust expert at George Washington University‘s Institute of Public Policy, said that government officials would have to prove that what Facebook did, affected consumers and competition.

Singer says the court will decide whether the services are too tightly intertwined to break up.

If Facebook were to be broken up, it would have a major impact on how new startups establish their services and what is seen in the marketplace on platforms.

 

 

 

 

About RavenH

Raven Haywood is a journalist for 10+ years. Graduate from Howard University.

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