US government, states launch antitrust lawsuits against Facebook

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U.S. regulators on Wednesday called for Facebook to be ordered to divest its Instagram and WhatsApp messaging services as the U.S. government and 48 states and districts accused the company of abusing its social media market power to crush smaller competitors.
The antitrust lawsuits were announced by the United States Federal Trade Commission and New York Attorney General Letitia James.

“It is extremely important that we block this predatory acquisition of companies and that we restore market confidence,” James said at a press conference announcing the lawsuit.

In its lawsuit, the FTC seeks to separate services from Facebook, saying Facebook has embarked on “a systematic strategy” to eliminate its competition, including buying up smaller emerging rivals like Instagram in 2012 and WhatsApp in 2014 James echoed this at his press conference, saying Facebook “was using its monopoly power to crush small rivals and stifle competition, all to the detriment of everyday users.”

The FTC fined Facebook US $ 5 billion in 2019 for privacy breaches and instituted new surveillance and restrictions on its activities. The fine was the largest the agency has ever imposed on a tech company, though it had no visible impact on Facebook’s business.

A protester joins others outside Zuckerberg’s home in November to protest what they say is Facebook spreading disinformation in San Francisco. U.S. regulators on Wednesday called for Facebook to be ordered to opt out of its Instagram and WhatsApp messaging services. (Jeff Chiu / The Associated Press)

“For years, Facebook has used its monopoly power as a social networking website to stifle competition and innovation and to sell alarming amounts of user data to earn money, all to the detriment of the many people who are using its platform, ”the North Carolina attorney said. General Josh Stein, who was on the executive attorneys general committee leading the investigation, in a press release.

Facebook called the government actions a “revisionist story” that punishes successful businesses and noted that the FTC cleared Instagram and WhatsApp acquisitions years ago. “The government now wants an overhaul, sending a frightening warning to American businesses that no sale is ever final,” Facebook general counsel Jennifer Newstead said in a statement echoing the company’s response. to a recent congressional antitrust investigation.

Facebook is the world’s largest social network with 2.7 billion users and a business with a market value of nearly US $ 800 billion. CEO Mark Zuckerberg is the fifth richest person in the world and the most public face of the Big Tech swagger.

James alleged that Facebook used to open its site to third-party app developers and then abruptly cut off developers it saw as a threat. The lawsuit – which includes 46 states, Guam and the District of Columbia – accuses Facebook of anti-competitive behavior and of using its market dominance to harvest consumer data and reap a fortune in advertising revenue.

‘A real problem’

The action marks the second time this year that the U.S. government has targeted a seemingly untouchable tech giant. The US Department of Justice sued Google in October for abusing its dominant position in online search and advertising – the government’s most significant attempt to boost competition since its landmark case against Microsoft two decades ago. Amazon and Apple have also been investigated in Congress and by federal authorities for alleged anti-competitive behavior.

The Justice Department’s lawsuit against Google, announced just two weeks before election day, drew politically motivated accusations from some sides. It was filed by a cabinet agency headed by an attorney general seen as a close ally of President Donald Trump, who has often publicly criticized Google.

An unnamed man wears a Zuckerberg mask as he and others demonstrate outside Zuckerberg’s home to protest what they say is Facebook spreading disinformation in San Francisco on the 21st November. (Jeff Chiu / The Associated Press)

The FTC, by contrast, is an independent regulatory agency whose five commissioners currently include three Republicans and two Democrats.

US President-elect Joe Biden has said the break-up of the Big Tech giants should be seriously considered. He singled out Facebook’s Zuckerberg for his contempt, calling him a “real problem.”

“Monopoly power”

Facebook paid US $ 1 billion for Instagram, bolstering the social networking platform’s portfolio a month before its stock went public. At the time, the photo sharing app had around 30 million users and was not producing any income. Zuckerberg promised the two companies would be run independently, but over the years the services have become more and more integrated with users able to link accounts and share content across the platforms. Instagram now has over a billion users worldwide. Facebook acquired WhatsApp, an encrypted messaging service, for US $ 19 billion.

But in the following years, the founders of Instagram and WhatsApp left Facebook amid disagreements with Zuckerberg. Facebook has started to integrate Instagram and WhatsApp, most recently by combining the chat functions of applications with its Messenger service. Such integration could make it more difficult to separate companies.

NetChoice, a Washington trade association that includes Facebook as a member, quickly filed a complaint against the lawsuits. The case for antitrust enforcement against Facebook “has never been so weak,” NetChoice vice president Carl Szabo said in a statement, naming new social services such as TikTok and Snapchat as rivals which could “overtake” the old platforms.

“These lawsuits mark an important turning point in the battle to curb big-tech monopolies and to re-energize antitrust enforcement,” said Alex Harman, competition policy advocate for Public Citizen, a consumer advocacy group at non-profit.



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