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Facebook faces US lawsuits for illegal monopolization

By Christian Imperio Published Dec 10, 2020 4:06 am Updated Dec 23, 2020 3:00 am

The United States Federal Trade Commission (FTC) and 48 attorneys general across the nation have sued Facebook, alleging that the social media behemoth has engaged in a “systematic strategy” of buying up rival companies like Instagram and WhatsApp to eliminate competition.

The FTC said in a statement that it would seek a permanent injunction in federal court that “could, among other things: require divestitures of assets, including Instagram and WhatsApp; prohibit Facebook from imposing anticompetitive conditions on software developers; and require Facebook to seek prior notice and approval for future mergers and acquisitions.”

According to the FTC’s complaint, the social media giant targeted “potential competitive threats to its dominance.” The complaint alleges that Facebook opted to buy Instagram for $1 billion in April 2012 after realizing that the rapidly growing startup “was a vibrant and innovative personal social network and an existential threat to Facebook’s monopoly power.” The complaint also alleges that the tech giant bought WhatsApp for $19 billion in February 2014  to neutralize the potential threat it poses and ensure that “any future threat will have a more difficult time gaining scale in mobile messaging.”

“Personal social networking is central to the lives of millions of Americans,” said Ian Conner, director of FTC’s Bureau of Competition. “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 a statement, Facebook general counsel Jennifer Newstead called the government’s actions as a “revisionist history” noting that the company’s acquisition of Instagram and WhatsApp were reviewed by relevant antitrust regulators at the time. 

“The FTC conducted an in-depth “Second Request” of the Instagram transaction in 2012 before voting unanimously to clear it. The European Commission reviewed the WhatsApp transaction in 2014 and found no risk of harm to competition in any potential market. Regulators correctly allowed these deals to move forward because they did not threaten competition,” Newstead said.

She added, “Now, many years later, with seemingly no regard for settled law or the consequences to innovation and investment, the agency is saying it got it wrong and wants a do-over. In addition to being revisionist history, this is simply not how the antitrust laws are supposed to work.”

Facebook is the world’s largest social media network with 2.7 billion users and a market value of $800 billion.

(Image from Associated Press)