The FTC sues Facebook, seeking to break up social network

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(Pocket-lint) – US federal antitrust authorities and several states are taking on Facebook, with two lawsuits attempting to rectify years of complaints about the social network’s dominance and undo its purchase of Instagram and WhatsApp.

Both Democratic and Republican attorneys general from 48 US states, including New York, are behind one of the suits announced 9 December 2020. The second suit, from the Federal Trade Commission, is expected to be filed soon, according to Politico. Both suits allege Facebook illegally used its power and resources to suppress and buy-out the competition.

“For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition,” said New York Attorney General Letitia James on Wednesday. “Facebook used vast amounts of money to acquire potential rivals before they could threaten the company’s dominance.”

Prosecutors looked at Facebook’s acquisitions of companies, which might’ve become bigger rivals if not acquired by Facebook, and their investigation also focused on the social networks’ conduct, including times when it cut off competitors’ access to Facebook user data. Their cases make clear that Facebook’s ongoing unchecked power is a threat to rivals and Americans. 

The FTC cited Facebook’s practice of cutting off API access as it an example of blunting “perceived competitive threats”. It gave an example where Facebook stopped Vine’s friend-finding feature after Twitter acquired the video app.

Recently disclosed internal communications also allege CEO Mark Zuckerberg and other senior Facebook executives repeatedly aimed to block competitive threats to the social network, according to House Judiciary Committee investigators. They reportedly uncovered e-mails in which Zuckerberg described the Instagram purchase as “insurance” to protect Facebook.

“One way of looking at this is that what we’re really buying is time. Even if some new competitors springs up, buying Instagram, Path, Foursquare, etc now will give us a year or more to integrate their dynamics before anyone can get close to their scale again,” Zuckerberg allegedly wrote. “Within that time, if we incorporate the social mechanics they were using, those new products won’t get much traction since we’ll already have their mechanics deployed at scale.”

Zuckerberg allegedly also said Facebook can “always just buy any competitive startups”. In internal conversations about the WhatsApp deal, Facebook executives said the merger was necessary to “shore up our position” and to stop the smaller company from outpacing Messenger. “I hate the word ‘land grab’ but I think that is the best convincing argument,” the House report quoted.

Other examples include an October 2013 deal, in which Facebook bought the Israeli startup Onavo for $115 million. That buyout allegedly allowed Facebook to deploy an “early bird warning system” for potential competitors, according to the House’s report. Investigators claim Facebook used data from Onavo to help justify its acquisition of WhatsApp.

Facebook also allegedly used the data to monitor Snapchat, which it tried to buy.

Keep in mind Facebook, which has 2.74 billion users worldwide as of last year, has consistently denied it is a monopoly both to the public and to regulators. It purchased Instagram for $1 billion in 2012 and WhatsApp for $19 billion in 2013.

The US Justice Department and several states are also expected to file additional suits against Google in the coming weeks.

Writing by Maggie Tillman.



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