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Facebook sued by US govt over its buying of WhatsApp and Instagram, harming competition

The FTC in a statement accused Facebook of "illegally maintaining its personal social networking monopoly through a years-long course of anticompetitive conduct".

twitter-logoAnkita Chakravarti | December 10, 2020 | Updated 15:02 IST

Highlights

  • Facebook on Wednesday was sued by the Federal Trade Commission for its anticompetitive conduct.
  • FTC in a statement accused Facebook of “illegally maintaining its personal social networking monopoly".
  • Following the accusations by FTC, 48 attorney generals filed a separate lawsuit against the social media giant.

Facebook on Wednesday was sued by the Federal Trade Commission for its anticompetitive conduct. The FTC in a statement accused Facebook of "illegally maintaining its personal social networking monopoly through a years-long course of anticompetitive conduct". Following the accusations by FTC, 48 attorney generals filed a separate lawsuit against the social media giant.

The lawsuit by the FTC and 48 attorney generals revolves around Facebook's acquisitions of smaller entities like WhatsApp and Instagram to eliminate competition from the market. The lawsuit alleged that Facebook has stifled competition by using anticompetitive tactics.

"For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition. Facebook used vast amounts of money to acquire potential rivals before they could threaten the company's dominance," New York Attorney General Letitia James said during a press conference. The coalition of 48 attorney generals is led by James.

The Federal Trade Commission in a separate lawsuit has highlighted Facebook's acquisition of WhatsApp and Instagram to stifle competition in the market. "The FTC is seeking a permanent injunction in federal court that could, among other things: require divestitures of assets, including Instagram and WhatsApp; prohibit Facebook from imposing anticompetitive conditions on software developers and require Facebook to seek prior notice and approval for future mergers and acquisitions," FTC said in a statement.

FTC in its complaint alleges that initially, Facebook tried competing with Instagram when it was an emerging social media platform but later bought the company instead of competing with it. The complaint further alleges that Facebook employees and CEO Mark Zuckerberg realized that Instagram was an existential threat to Facebook's monopoly power.

Similarly, Facebook also perceived the then-emerging messaging app WhatsApp as a threat to its monopoly power. The complaint alleges that Facebook bought its threat WhatsApp for $19 billion in 2014 rather than compete with it. "Facebook's acquisition of WhatsApp allegedly both neutralizes the prospect that WhatsApp itself might threaten Facebook's personal social networking monopoly and ensures that any future threat will have a more difficult time gaining scale in mobile messaging," the statement by FTC read.

The FTC further alleged that Facebook not only acquired its biggest threats in the market, it had also imposed anticompetitive behaviors against the third-party software. As per the complaint, Facebook has made key "APIs available to third-party applications only on the condition that they refrain from developing competing functionalities, and from connecting with or promoting other social networking services."

"The complaint alleges that Facebook has enforced these policies by cutting off API access to blunt perceived competitive threats from rival personal social networking services, mobile messaging apps, and other apps with social functionalities. For example, in 2013, Twitter launched the app Vine, which allowed users to shoot and share short video segments. In response, according to the complaint, Facebook shut down the API that would have allowed Vine to access friends via Facebook, the FTC statement read.

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