Federal government and attorneys general from 46 states push to force separation of Facebook
The federal and 46 state governments on Wednesday filed a class action lawsuit against Facebook, accusing the company of abusing its leadership position in the social media market to suppress competitors. The plaintiffs are seeking, among other things, to force the court to get rid of Facebook’s WhatsApp messenger and Instagram social network, both controlled by the company.
The antitrust lawsuits against Facebook, announced today by the Federal Trade Commission (FTC) and New York State Attorney General Leticia James, were the second round of government action against the previously seemingly untouchable tech giants. Recall that in October of this year, the Justice Department filed suit against Google for abusing its dominant position in online search and online advertising.
Amazon and Apple are also under investigation by Congress and federal authorities for allegedly infringing on competitors. New York’s attorney general said at a news conference Wednesday that there is a need to “stop the unjustifiably aggressive takeover practices and restore confidence in the marketplace.”
The Federal Trade Commission believes that Facebook is engaged in a systematic elimination of competitors by simply acquiring small and promising companies, as happened with Instagram in 2012 and WhatsApp in 2014.
According to Letisha James, Facebook is “using its monopoly to eliminate smaller rivals and suppress competitors at the expense of ordinary users.”
The Commission in 2019 fined Facebook $5 billion for violating user privacy and imposed new supervisory rules and restrictions on the company. The largest fine the FTC has ever imposed on technology companies had no discernible impact on Facebook’s operations.
Facebook representatives called the authorities’ actions “revisionism” and said that the government was punishing successful businesses, recalling that it was the FTC that gave the company permission to buy Instagram and WhatsApp several years ago.
“Facebook is the largest social network in the world, with about 2.7 billion users. Its market value is estimated at $800 billion, with CEO Mark Zuckerberg among the top 5 richest people in the world. James claimed that Facebook, among other things, practiced opening the site to third-party app developers and then abruptly shutting down those that the company saw as a threat to its monopoly market position.
The lawsuit, which was filed on behalf of authorities in 46 states, Guam and the District of Columbia, accuses Facebook of suppressing competitors and using its dominant market position to collect consumer data and generate superprofits from advertising.
North Carolina Attorney General Josh Stein believes a lawsuit against Facebook could fundamentally change the social media market, as it did with the telephone market in the early 1980s, when AT&T’s monopoly in the industry was forcibly dismantled by court order.
“We hope to restructure the social media market in the United States, which now has only one player,” Stein told reporters. James added that the coalition of states and territories worked with the Federal Trade Commission, but the prosecutor’s review was separate from the FTC investigation.
The DOJ lawsuit against Google, filed just two weeks before presidential election day, sparked allegations of political motivation, as it was spearheaded by U.S. Attorney General William Barr, a longtime ally of President Donald Trump, a frequent critic of Google. The FTC is an independent regulator whose board now includes three Republicans and two Democrats.
President-elect Joe Biden has previously stated the need to consider the possible unbundling of the tech giants. Biden called Mark Zuckerberg “a real problem.
Over the past 15 years, Facebook has taken over about 70 companies in addition to Instagram and WhatsApp. The company paid a billion dollars for Instagram. At that time, the app for publishing photos and short videos had about 30 million users and was not generating revenue. A few years later, Facebook bought messenger WhatsApp for $19 billion.
Zuckerberg had previously promised that the two companies would operate independently of each other, but over the years all three services have integrated with each other. Users can now link their accounts and share content across all of Facebook’s platforms. Such close integration can make it difficult to separate Facebook’s business. “Instagram is now used by more than a billion people worldwide.