Attorneys-general from 46 states, along with the Federal Trade Commission, filed separate antitrust lawsuits against Facebook on Wednesday alleging the company had been anticompetitive in acquiring two key competitors – Instagram and WhatsApp – over the past decade.
Mark Zuckerberg, CEO of Facebook, has previously argued that his company has acquired WhatsApp and WhatsApp … [+]
The US state lawsuit, led by New York attorney general Letitia James, alleges that Facebook established Facebook as the market leader by purchasing the social media platform Instagram in 2012 and the messaging service WhatsApp in 2014 Could deprive users of their privacy.
To combat Facebook’s anti-competitive behavior, states and the FTC are calling for remedial action such as: For example, forcing the company to potentially sell Instagram or WhatsApp and forcing Facebook to obtain prior approval before future mergers and acquisitions.
The Federal Trade Commission, which worked with attorneys general to investigate Facebook, also filed a case accusing the social media giant of “pursuing a systematic strategy” through its acquisitions “to threaten its monopoly to eliminate”.
One example of this is, as Facebook claims, Facebook, the company that makes competing products, is blocking access to its APIs. The FTC calls this practice “imposing anti-competitive conditions on software developers”.
The antitrust proceeding is the greatest regulatory and legal challenge Facebook has ever faced.
Forty-six states, as well as Washington DC and Guam, joined the bipartisan lawsuit, leaving Alabama, Georgia, South Carolina and South Dakota the only states that hadn’t signed up.
In a statement, Facebook criticized the charges. “Years after the FTC approved our acquisitions, the government now wants an overhaul regardless of the impact a precedent would have on the wider business community or the people who choose our products every day,” the company said. Facebook Advocate General Jennifer Newstead called the lawsuits a “revisionist story,” adding that “antitrust laws exist to protect consumers and encourage innovation, not to punish successful businesses.” At a congressional hearing in July, Facebook CEO Mark Zuckerberg argued that by acquiring Instagram and WhatsApp, both services could grow and thrive, funded by Facebook’s investments.
Zuckerberg’s internal emails, revealed during a July Subcommittee hearing, revealed that he viewed Instagram as a competitive threat to Facebook. “Instagram can seriously hurt us without becoming a big company,” Zuckerberg wrote in 2012. A separate series of internal emails dated January 2013 shows that Zuckerberg and other company executives repeatedly use WhatsApp as a threat to Facebook and its own chat -App, Facebook Messenger, viewed. Regarding WhatsApp and some other messaging apps, Zuckerberg wrote, “These companies are trying to build social networks and replace us.” He then told his team that he had decided to block these apps from being advertised on Facebook.
In September, the company started rolling out a feature that would allow Facebook users to send direct messages to Instagram users and vice versa. This was the first step in the company’s grand plan to unify messaging services across all platforms, including WhatsApp. Facebook’s attempts to integrate its services have raised alarms among lawmakers around the world that it may be more difficult to break the company open when its services are deeply integrated.
Read the state lawsuit here and the FTC complaint here.
Facebook Fears WhatsApp Threat Before Buying 2014, Documents Show (Wall Street Journal)