World News – US – FTC and states suing Facebook, could force Facebook to divest Instagram and WhatsApp

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The Federal Trade Commission and a coalition of attorneys-general from 48 states and territories filed two separate antitrust lawsuits against Facebook on Wednesday. The lawsuits target two of Facebook’s top acquisitions: Instagram and WhatsApp.

Both are looking for remedies for the alleged anti-competitive behavior that could lead Facebook to sell the two apps.

The FTC claims Facebook had a systematic strategy to eliminate threats to its monopoly, including the acquisitions of Instagram and WhatsApp in 2012 and 2014. It is claimed that Facebook has monopoly power in the U. . S.. . personal market for social networks.

The FTC claims Facebook had a systematic strategy to eliminate threats to its monopoly, including the 2012 and 2014 acquisitions of Instagram and WhatsApp that the FTC previously approved. Facebook acquired Instagram for $ 1 billion and WhatsApp for $ 19 billion.

As part of the lawsuit, the FTC will request a permanent disposition that could lead to the sale of Instagram and WhatsApp, the agency said. Additionally, the FTC will seek to prohibit Facebook from imposing anti-competitive conditions against third-party software developers.

« Ever since Facebook toppled its early rival Myspace and gained monopoly power, it has set itself the goal of using anti-competitive means to play defense, » the FTC’s lawsuit said. « After Facebook identified two major competitive threats to its dominant position – Instagram and WhatsApp – Facebook tried to quell those threats by buying the companies. This reflected CEO Mark Zuckerberg’s view, expressed in a 2008 email, that it is better to buy than compete. ‘ »

The FTC lawsuits also indicate that Facebook tried to buy out rivals Twitter and Snapchat.

« In the lawsuit that Twitter rejected [Facebook] ‘s offer to be acquired in November 2008, Mr.. Zuckerberg wrote, « I looked forward to the extra time that would have given us to get our product in order without worrying about the growth of a competitor, » the FTC said in the lawsuit.

A partially redacted portion of the FTC lawsuit states that Facebook’s main blue app has lost users and engagement with Instagram.

« By taking control of Instagram, Facebook has sought to prevent Instagram from ‘cannibalizing’ Facebook Blue and confirms that an independent Instagram poses a significant threat to Facebook’s personal social networking monopoly, » it said in the lawsuit.

The commissioners voted to file the complaint in the U.. S.. . District Court for the District of Columbia in a 3-2 vote. Republican Commissioners Noah Phillips and Christine Wilson disagreed, while Republican chairman Joe Simons joined his two Democratic counterparts, Rohit Chopra and Rebecca Kelly Slaughter, in a majority vote.

As the states and the FTC worked together in the course of their investigation, the coalition of states led by New York Attorney General Letitia James decided to file a separate lawsuit.

James said at a news conference Wednesday that while there may be stylistic differences in the lawsuits, while states are « essentially in line with the FTC ». She made it clear that the states are « independent law enforcers ». « 

James said the state lawsuit sent a message that « all efforts to stifle competition, harm small businesses, reduce innovation and creativity, and diminish privacy will be implemented with the full force of our offices. « . « 

Facebook first announced that it was being investigated by the Federal Trade Commission for antitrust reasons in July 2019. A coalition led by Letitia James of New York announced an investigation into the deal shortly thereafter.

Facebook has been undergoing an accelerated review of both user data handling and competitive practices since 2017 when news investigations revealed that its service was being used by the political data firm Cambridge Analytica to obtain information about users without their consent prior to the 2016 U 2016. S.. . Presidential election. The FTC resigned itself to Facebook for $ 5 billion last year after investigating its data practices, which tech hawks in Congress criticized as a slap in the face for Facebook. It only made up about 9% of Facebook’s sales in 2018.

On the competitive side, lawmakers have criticized the FTC for failing to adequately review Facebook’s previous acquisitions of Instagram and WhatsApp. The House of Representatives Antitrust Subcommittee released internal Facebook documents from its own investigation into the company, showing that Facebook executives are concerned about Instagram’s rise. In a correspondence between the boss of Instagram and an investor, he feared that Facebook boss Mark Zuckerberg would « switch to destruction mode » if he refused to sell.

The Facebook lawsuit follows another antitrust indictment by the Justice Department against Google. The DOJ alleged in its October filing that Google violated antitrust laws by illegally maintaining a monopoly on general online search by tying up distribution channels for competitors. Eleven Republican attorneys general joined the DOJ in its lawsuit. Other states are still investigating Google and could file their own charges and potentially join the DOJ’s complaint.

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Facebook, United States Antitrust, Federal Trade Commission, Competition Law

World News – US FTC and States Sue Facebook, Could Force Facebook to Divest Instagram and WhatsApp

Ref: https://www.cnbc.com