The United States Federal Trade Commission and attorneys general from 48 states and territories filed a pair of antitrust lawsuits against social media giant Facebook on Wednesday. The lawsuits take aim at two of Facebook’s biggest acquisitions: video and picture sharing platform Instagram and messaging platform WhatsApp.
New York Attorney General Letitia James suggested that the lawsuit was targeting Facebook's “anticompetitive conduct,” according to a report from Ohio-based news outlet WTOL.
The attorneys general complaint alleges that over the last decade Facebook has hindered competition, while also eroding user privacy, in the name of profit.
“Facebook’s unchecked power has grabbed an alarming level of control over what we see, say, buy and even who our friends are,” Ohio Attorney General Dave Yost said. “It is a dangerous seduction where we, as consumers, have become the product for Facebook by controlling so many aspects of our lives.”
The Federal Trade Commission's lawsuit alleges that Facebook has engaged in a strategy designed to eliminate threats to its monopoly, particularly through its $1-billion acquisition of Instagram in 2012 and its $19-billion purchase of WhatsApp in 2014. The FTC claims that Facebook holds a monopoly over the U.S. personal social networking market.
Part of the FTC lawsuit implies that the Commission will be seeking a permanent injunction that could result in Facebook being forced to relinquish control over Instagram and WhatsApp.
“Since toppling early rival Myspace and achieving monopoly power, Facebook has turned to playing defense through anticompetitive means,” the FTC lawsuit states. “After identifying two significant competitive threats to its dominant position — Instagram and WhatsApp — Facebook moved to squelch those threats by buying the companies, reflecting CEO Mark Zuckerberg’s view, expressed in a 2008 email, that ‘it is better to buy than compete.’”
Following the news of the lawsuits, the social media company's stock was down nearly four per cent, as reported by CNBC.
“This is revisionist history,” General Counsel for Facebook Jennifer Newstead responded in a statement.
“Antitrust laws exist to protect consumers and promote innovation, not to punish successful businesses. Instagram and WhatsApp became the incredible products they are today because Facebook invested billions of dollars, and years of innovation and expertise, to develop new features and better experiences for the millions who enjoy those products,” Newstead continued.
“The most important fact in this case, which the Commission does not mention in its 53-page complaint, is that it cleared these acquisitions years ago. The government now wants a do-over, sending a chilling warning to American business that no sale is ever final,” the spokesperson said.
“People and small businesses don’t choose to use Facebook’s free services and advertising because they have to, they use them because our apps and services deliver the most value. We are going to vigorously defend people’s ability to continue making that choice.”