FTC, coalition of states suing Facebook over allegedly stifling competition

Lawsuits could require company to divest Instagram, WhatsApp
Facebook Co Founder Break Up Facebook
Posted at 3:34 PM, Dec 09, 2020

WASHINGTON, D.C. – The Federal Trade Commission (FTC) and a coalition of 48 attorneys general have filed lawsuits against Facebook, accusing the company of illegally stifling its competition to protect its “monopoly power.”

The lawsuits allege that Facebook illegally acquired competitors in a predatory manner and cut services to smaller threats, depriving users from the benefits of competition and reducing privacy protections along the way. They claim Facebook took these actions to boost its bottom line through increased advertising revenue.

The FTC says it's seeking a permanent injunction in federal court that could require divestitures of assets, including Instagram and WhatsApp. It could also prohibit Facebook from imposing anticompetitive conditions on software developers and require the company to seek prior notice and approval for future mergers and acquisitions.

New York Attorney General Letitia James is leading the bipartisan coalition, which includes attorneys general from 46 states, Washington D.C. and Guam. Their goal is to “stop Facebook’s anticompetitive conduct,” according James.

“Today, we are taking action to stand up for the millions of consumers and many small businesses that have been harmed by Facebook’s illegal behavior,” said James in a statement. “Instead of competing on the merits, Facebook used its power to suppress competition so it could take advantage of users and make billions by converting personal data into a cash cow.”

The coalition's lawsuit claims Facebook employs a variety of methods to impede competing services and “build a competitive moat” around the company. The plaintiffs claim the two most utilized strategies have been to acquire smaller rivals and potential rivals before they can threaten Facebook’s dominance, as well as suffocating and squashing third-party developers that Facebook invited to utilize its platform.

The attorneys general use Facebook’s purchases of Instagram and WhatsApp as examples. They claim Facebook saw Instagram as a direct threat quickly after the company launched, so they acquired it for $1 billion in 2012. The company then bought WhatsApp for $19 billion in 2014.

The coalition of AGs is asking the U.S. District Court for the District of Columbia to halt Facebook’s “illegal, anticompetitive conduct” and block the company from continuing this behavior in the future.

Additionally, the collation is asking the court to restrain Facebook from making further acquisitions valued at $10 million or more without advance notice to the states.

Finally, they’re asking the court to provide any additional relief it determines is appropriate, including the divestiture or restructuring of illegally acquired companies, or current Facebook assets or business lines.

Responding to the lawsuits, Facebook released this statement on Twitter:

"We're reviewing the complaints & will have more to say soon. Years after the FTC cleared our acquisitions, the government now wants a do-over with no regard for the impact that precedent would have on the broader business community or the people who choose our products every day."