FTC, 46 states file antitrust suit against Facebook, seek Instagram & WhatsApp break-up

Posted:
in General Discussion edited December 2020
Facebook on Wednesday was hit by a pair of lawsuits by the Federal Trade Commission and a coalition of attorneys general from nearly the entire United States alleging that the social media giant engages in anticompetitive practices.

Credit: Brett Jordan
Credit: Brett Jordan


The first lawsuit, filed by New York Attorney General Letitia James on Wednesday, claims that the social media giant uses its power to illegally stifle competition and protect its position. In total, a bipartisan group of attorneys general from 48 states and territories, including Guam and the District of Columbia, are expected to sign onto the lawsuit.

"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" James said on Wednesday. "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 states represent a broad swath of the U.S. Only four states were not named in the lawsuit's announcement, and are therefore not expected to sign onto the complaint.

States not participating in the Facebook antitrust lawsuit

  • Alabama

  • Georgia

  • South Carolina

  • South Dakota
Soon afterwards, the FTC announced its own legal action against Facebook for "illegally maintaining its personal social networking monopoly through a years-long course of anticompetitive conduct."

"Since toppling early rival Myspace and achieving monopoly power, Facebook has turned to playing defense through anticompetitive," the FTC states.

In a tweet shortly after the lawsuits were announced, Facebook said it would have "more to say soon," but likened the actions to the government now wanting a "do-over."

We're reviewing the complaints & will have more to say soon. 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.

-- Facebook Newsroom (@fbnewsroom)


Both lawsuits place particular emphasis on Facebook's acquisition of WhatsApp and Instagram. The FTC in its lawsuit says that Facebook had engaging in a systematic strategy to eliminate threats to its market power.

Specifically, the allegations appear to stem from several emails sent by CEO Mark Zuckerberg suggesting that the Instagram acquisition was, at least in part, to squash competition. Those emails were revealed as part of a House antitrust subcommittee investigation.

Facebook acquired Instagram for $1 billion in 2012 and WhatsApp for $19 billion in 2014. The FTC cleared both acquisitions at the time.

The states' antitrust lawsuit also examines whether the acquisitions made the user experience worse in terms of privacy, while the FTC complaint also notes that Facebook tried -- and failed -- to gobble up other competitors such as Twitter and Snapchat.

The two lawsuits will also examine whether Facebook uses its reach and power to stifle user growth on competing services. The lawsuit from the attorneys general alleges that Facebook engages in a "buy or bury" approach to competition, using its market power in an attempt to "squeeze every bit of oxygen out of the room for" companies that refuse to be bought.

Remedies for the alleged antitrust violations include actions that could force Facebook to divest from Instagram and WhatsApp. The FTC could also seek to prohibit Facebook from imposing anticompetitive conditions on third-party developers.

Both the FTC and the states cooperated closely during their investigation of Facebook, but the coalition of states chose to file a separate lawsuit. Although attorney General James said they are "aligned substantively with the FTC," she said there may be some stylistic differences in the lawsuits. She made it clear that the states are "independent enforcers of the law," however.

Though the lawsuits Wednesday could set a precedent for the industry, Facebook isn't the only tech giant to come under antitrust scrutiny in recent years. The House antitrust investigation that revealed the Zuckerberg emails also targeted Apple, Google, and Amazon.

Apple has come under fire for its tight control over its app store as well, with complaints alleging anti-trust behavior. To partially combat that, Apple announced a program that would cut that rate to 15% for developers making less than $1 million a year on the app marketplace.
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Comments

  • Reply 1 of 45
    Who says all news is doom and gloom?  :D
    NotoriousDEVAlex1Naderuttergaramonddysamoriawatto_cobra
  • Reply 2 of 45
    DAalsethDAalseth Posts: 1,441member
    YESSSS!!!
    Now to hit them hard and make it stick.
    williamlondonAlex1NDogpersongeorgie01dysamoriawatto_cobra
  • Reply 3 of 45
    I have zero sympathy for Facebook, but even I think this is government overreach.
    mike1pujones1seanjthrangn2itivguy
  • Reply 4 of 45
    The irony that each side thinks FB favors the other. 

    This should be fun. Popcorn, please. 
    seanjTRAGwatto_cobra
  • Reply 5 of 45
    jdwjdw Posts: 931member
    Love them or hate them, all of these tech companies, INCLUDING APPLE, are America's home grown businesses that should be celebrated not destroyed by the over-reaching hand of Big Brother.  And I say this hating all the silly fact checking labels FaceBook puts on posts (and Twitter too), which in fact limit individual liberty, even if one can content those fact checkers are correct.  So even though I personally dislike various things about FaceBook and even Google, I would never ask Big Brother to step in and crush them for being Capitalists.  

    Sorry, but when you are in business, you seek to limit your competition.  Label it Anti-trust or Anti-competitive if you like, but it's only reasonable to buy Instagram as a matter of good business.  And what may be a near Monopoly within the USA is most assuredly not in China, which is a massive country everyone needs to ponder.  China gains when America loses.  And America is not gaining by breaking up its big tech firms.  What you see in the news on this topic is merely a game of envy and revenge and the illusion of "protecting the little guy and increasing competition for the good of all consumers."

    Also bear in mind that even though there is more digital blood being shed at the hand of the US Government at Google and FaceBook right now, Apple is still a target.  By supporting the anti-trust lawsuit mania, you are in fact supporting action against Apple too.  Just keep the in mind.
    williamlondonpujones1watto_cobra
  • Reply 6 of 45
    rcfarcfa Posts: 936member
    Not comparable to Apple: Apple is a minority player in each market it serves.

    FB, like Microsoft of yore, tries to dominate a segment and leverage that to dominate further segments, which is the very definition of anti-competitive behavior.

    So yeah, they have a good case.

    Just don’t think it’ll hurt Zuck, the sum of the split up companies is usually worth more as the entire conglomerate; and breaking up isn’t disowning. So Zuck’s net worth would likely skyrocket from the companies being split up. He’d be a massive shareholder in each of them, and benefit immensely from their separate growth trajectories.

    Same happened when the split up Ma-Bell
    seanjrazorpitdysamoria
  • Reply 7 of 45
    netroxnetrox Posts: 992member
    Exactly how is it anticompetitive? Anyone can have a social media website. Are they actually blocking competitors? 


    williamlondonmike1applguyn2itivguy
  • Reply 8 of 45
    How come South Dakota does not get a bullet point in the article?
    dysamoriaapplguy
  • Reply 9 of 45
    Annihilate Zuck, but Letitia James needs to save some time for you know who. 
    Dogpersonpujones1watto_cobra
  • Reply 10 of 45
    sflocalsflocal Posts: 5,460member
    Social media companies can disappear in a blink, yet companies like Facebook are in business because there's obviously a market they're serving.  Last time I checked, no one is putting a gun to everyone's head and forcing them to use FB, IG, or WhatsApp.  There are plenty of other competitors in the market, and even with all the hate towards FB, people seem to still be using them.

    Breaking up a company for being too successful?  I'm not a fan per-se of Facebook but I hope they win.  The government needs to keep their paws off of successful, American companies and if anything, encourage smaller companies and startups to rise up.  I think it sends the wrong message that one is penalized for being too successful.  Why Facebook and not Amazon?  This is more political than any actual damage happening in the big picture.  FB just pissed-off one to many politicians.
    williamlondondhawkins541pujones1razorpitapplguy
  • Reply 11 of 45
    lkrupplkrupp Posts: 8,878member
    All fun and games until they go after Apple.
    watto_cobra
  • Reply 12 of 45
    flydogflydog Posts: 890member
    jdw said:

    Sorry, but when you are in business, you seek to limit your competition.  Label it Anti-trust or Anti-competitive if you like, but it's only reasonable to buy Instagram as a matter of good business.  And what may be a near Monopoly within the USA is most assuredly not in China, which is a massive country everyone needs to ponder.  China gains when America loses.  And America is not gaining by breaking up its big tech firms.  What you see in the news on this topic is merely a game of envy and revenge and the illusion of "protecting the little guy and increasing competition for the good of all consumers."


    It's clear that you have zero understanding of even the fundamental concepts of antitrust law.

    FaceBook is not being sued because it tried to limit competition.  FaceBook is being sued because it used illegal means to limit competion, and harmed consumers as a result. 
    williamlondonDAalsethDogpersonaderutterseanjOfergeorgie01applguywatto_cobra
  • Reply 13 of 45
    lkrupplkrupp Posts: 8,878member
    The irony here is that the FTC was the one who approved the Instagram and WhatsApp acquisitions in the first place. 
    aderutterseanjmjtomlinmuthuk_vanalingamn2itivguywatto_cobra
  • Reply 14 of 45
    How come South Dakota does not get a bullet point in the article?
    They dodged the bullet.
    dewmeTRAGwatto_cobra
  • Reply 15 of 45
    wood1208wood1208 Posts: 2,496member
    What good is Second Amendment of Constitution right to keep and bear arms:unless you use it on these goverment morons. American politicians and judiciary system has become arrogant and bully and using their power to destroy their own. It takes lot and years of handwork, innovation to create big successful company like Facebook, Google, Apple,etc. China and many countries are happy to see infighting and waiting Americans companies to get weak and vanished so they can fill the vacuum and take over one by one.
    edited December 2020 watto_cobra
  • Reply 16 of 45
    MplsPMplsP Posts: 2,883member
    wood1208 said:
    What good is Second Amendment of Constitution right to keep and bear arms:unless you use it on these goverment morons. American politicians and judiciary system has become arrogant and bully and using their power to destroy their own. It takes lot and years of handwork, innovation to create big successful company like Facebook, Google, Apple,etc. China and many countries are happy to see infighting and waiting Americans companies to get weak and vanished so they can fill the vacuum and take over one by one.
    I guess the term ‘well regulated’ doesn’t mean anything to you
    muthuk_vanalingamn2itivguy
  • Reply 17 of 45
    MplsPMplsP Posts: 2,883member
    The Headline on Apple News says ‘48 attorneys general.’ After reading it the AGs from DC and Guam also filed suit. 
  • Reply 18 of 45
    mjtomlinmjtomlin Posts: 2,410member
    wood1208 said:
    ... It takes lot and years of handwork, innovation to create big successful company like Facebook, Google, Apple, etc...

    Agreed, but the problem arrises when that company forgets what they went through to get to that point. Innovation dries up and the only way to remain on top is to basically squash competition rather than compete on their own merits. I don't have a problem when one company buys another, but I do have a problem when one huge company buys another competing company - that rarely ever works out well for the market or users/consumers. In an open and free market it is the spirit of competition that mainly drives innovation. Consolidation has the opposite affect; when you stomp out competition, you no longer have a reason or drive to stay ahead, so innovation stalls.
    n2itivguy
  • Reply 19 of 45
    sflocal said:
    Social media companies can disappear in a blink, yet companies like Facebook are in business because there's obviously a market they're serving.  Last time I checked, no one is putting a gun to everyone's head and forcing them to use FB, IG, or WhatsApp.  There are plenty of other competitors in the market, and even with all the hate towards FB, people seem to still be using them.
    When there isn’t comparable competition, which there hasn’t been, then your argument is irrelevant. The question is why there isn’t comparable competition—is it because no one has stepped up, is it because Facebook is just so amazingly good and no one can do as good of work, or is it because Facebook has cornered the market and made it difficult for competitors to succeed?

    That’s the issue at hand, and obviously those bringing the lawsuit think that Facebook is it in the wrong. Facebook having its paws in multiple areas complicates things for them.
    edited December 2020 muthuk_vanalingamwatto_cobra
  • Reply 20 of 45
    jccjcc Posts: 283member
    This is what happens when you have a sleazy CEO like Zuck. He’ll sell his own mother for a buck. First he sleazed up to Trump, then he sleazed up to the democrats. So, basically he pissed off both sides. Now, there will be blood.
    watto_cobra
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