Will Facebook be forced to sell Instagram and WhatsApp?
The Federal Trade Commission and over 40 states in the United States on Wednesday accused social media giant Facebook of crushing competition by buying other companies. 48 Attorneys General, from 46 states, the territory of Guam, and the District of Columbia have filed an antitrust lawsuit against Facebook. Only South Dakota, South Carolina, Alabama, and Georgia chose to stay out of it. Here's what happened.
Facebook's deals with WhatsApp and Instagram were flagged
In two separate lawsuits, Facebook's past acquisitions were brought up. It was alleged that the company purchased competitors "illegally" and in a "predatory manner." The company's purchase of Instagram for $1 billion in 2012 and WhatsApp's acquisition for $19 billion in 2014 were particularly flagged. Going a step further, FTC said the WhatsApp and Instagram deals must be unwound.
FTC wants to roll back Facebook's "anticompetitive conduct"
Ian Conner, director of FTC's Bureau of Competition, was blunt about the intentions. "Our aim is to roll back Facebook's anticompetitive conduct and restore competition so that innovation and free competition can thrive," he said in a statement. New York Attorney General Letitia James is leading the coalition of attorneys general. They started investigating Facebook's dealings in 2019 and were joined by FTC later.
Facebook, and every other company, should get message: James
James seemed satisfied with the support the lawsuit garnered. "Today's suit should send a clear message to Facebook and every other company that any efforts to stifle competition, reduce innovation, or cut privacy protections will be met with the full force of our offices," she said. The twin lawsuits qualify as the biggest regulatory attack against Facebook, since it was founded in 2004.
The lawsuits mark second biggest regulatory effort against tech giants
James accused Facebook of using "vast amounts of money" to buy companies that had the potential of threatening its dominance in the market. All Facebook wanted to do was "squeeze every bit of oxygen out of the room," she said. In October, Google was served with a lawsuit by the Department of Justice. It was accused of monopolizing the search and online ad markets.
Meanwhile, Facebook slammed the lawsuits, reminded deals profited WhatsApp, Instagram
Facebook, naturally upset with the lawsuits, said antitrust laws weren't meant to "punish successful companies." The company's General Counsel Jennifer Newstead dubbed the lawsuits "revisionist history," reminding that both WhatsApp and Instagram have also tasted success after Facebook invested money. "The government now wants a do-over, sending a chilling warning to American business that no sale is ever final," Newstead said.
Zuckerberg said the company is prepared to fight in court
Founder Mark Zuckerberg also spoke to employees. "Overall, we disagree with the government's allegations. The reality is that we compete with many other services in everything we do, and we compete fairly," he said, according to CNET. If the courts rule in favor of the states, Facebook will be restricted from making acquisitions valued at or above $10 million without telling, the plaintiff states.
