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Menlo Park-based Facebook is being sued by the Federal Trade Commission and multiple states for alleged monopoly practices, California Attorney General Xavier Becerra’s office said Wednesday.
The states’ suit stems from Facebook’s acquisition of Instagram in 2012 and WhatsApp in 2014. Those acquisitions allegedly produced fewer options for social networking, increased ads directed at users and restricted the variety and quality of privacy measures for users.
Becerra alleges that Facebook has gained a monopoly by buying the emerging competitors. The FTC alleges also that Facebook has been imposing anticompetitive conditions on makers of software.
“Anticompetitive behavior harms the market, whether that is a market for health care, telecommunications, or social networking,” Beccera said in a statement.
“Facebook leveraged its market power to squash competition and monopolize the market, enabling greater collection and control of data and squandering innovation,” he said.
Forty-six states, the District of Columbia and Guam want Facebook in the future to tell them in advance of certain mergers and acquisitions and an injunction to stop the company from any more anticompetitive behavior.
But Facebook vice president and general counsel Jennifer Newstead said federal regulators and the states have stood by now for years as Facebook has invested millions of hours and billions of dollars making Instagram and WhatsApp what they are today.
The Instagram and WhatsApp acquisitions were reviewed by the appropriate federal regulators at the time and neither regulator disapproved of the purchases, Newstead said.
“Regulators correctly allowed these deals to move forward because they did not threaten competition,” she said in a statement.
This is not how antitrust laws are supposed to work, she said.
A spokesperson for the FTC was not immediately available to respond to the apparent turnaround by the regulator.
Federal regulators said that among other measures they could take, they could break up Facebook by forcing it to divest of Instagram and WhatsApp and possibly other acquisitions.
“Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive,” Ian Conner, director of the FTC’s Bureau of Competition, said in a statement.
State prosecutors allege that testimony by Facebook executives and emails show that the company bought Instagram and WhatsApp to stop people from using those platforms instead of Facebook.
The prosecutors also allege that Facebook kept watch on the expected growth of other applications and bought those that it thought posed a threat.
At the end of 2019, the social networking giant had revenue of nearly $71 billion and net profit of about $18.5 billion.
Newstead added that U.S. trade regulators looked at the Instagram acquisition twice and the second time cleared it unanimously.
Federal trade officials said in a statement Wednesday that the vote to seek this injunction against Facebook was three to two with Commissioners Noah Joshua Phillips and Christine S. Wilson dissenting.
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After receiving his first coronavirus vaccine injection, Dr. Jonathon Rose, director of Outpatient Psychology at the VA Palo Alto Spinal Cord Injury Clinic, waits for about 15 minutes to make sure that the vaccine does not provoke any side effects. Photo by Federica Armstrong. -
Dr. Craig Zone, physician at the VA Palo Alto Health Care System, receives his first injection of the Pfizer-BioNTech coronavirus vaccine. Photo by Federica Armstrong.
In addition to antitrust prosecution, can we get FB for destroying democracy around the world?
I have had many disagreements with you Waldo.
But in this case, I cannot argue against you.
Misinformation of any kind is the ultimate means of self destruction of self government.
This election and its “legal” challenges have really done so much damage to our system we still are not aware of the long term problems.
Given the uncertainty about who will be President come January 21, perhaps Facebook will hire BOTH Hunter Biden and Donald Trump, Jr.