U.S. government and states sue Facebook for ‘predatory’ conduct
FACEBOOK CALLED THE GOVERNMENT ACTIONS ‘REVISIONIST HISTORY’ THAT PUNISHES SUCCESSFUL BUSINESSES AND NOTED THAT THE FTC CLEARED THE INSTAGRAM AND WHATSAPP ACQUISITIONS YEARS AGO.
The U.S. government and 48 states (including Florida) and districts sued Facebook on Wednesday, accusing it of abusing its market power in social networking to crush smaller competitors and seeking remedies that could include a forced spinoff of the social network’s Instagram and WhatsApp services.
The landmark antitrust lawsuits, announced by the Federal Trade Commission and New York Attorney General Letitia James, mark the second major government offensive this year against seemingly untouchable tech behemoths. The Justice Department sued Google in October for allegedly abusing its dominance in online search and advertising — the government’s most significant attempt to buttress competition since its historic case against Microsoft two decades ago. Amazon and Apple also have been under investigation in Congress and by federal authorities for alleged anticompetitive conduct.
James noted at a news conference that “it’s really critically important that we block this predatory acquisition of companies and that we restore confidence to the market.”
The FTC said Facebook has engaged in a “a systematic strategy” to eliminate its competition, including by purchasing smaller upand-coming rivals, such as Instagram in 2012 and WhatsApp in 2014. James echoed that in her news conference, saying Facebook “used its monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users.”
The FTC fined Facebook $5 billion in 2019 for privacy violations and instituted new oversight and restrictions on its business. The fine was the largest that the agency has ever levied on a tech company, although it had no visible impact on Facebook’s business.
Facebook called the government actions “revisionist history” that punishes successful businesses and noted that the FTC cleared the Instagram and WhatsApp acquisitions years ago. “The government now wants a do-over, sending a chilling warning to American business that no sale is ever final,” Facebook general counsel Jennifer Newstead said in a statement that echoed the company’s response to a recent congressional antitrust probe.
Facebook is the world’s biggest social network with 2.7 billion users. The company has a market value of nearly $800 billion, and CEO Mark Zuckerberg is the world’s fifth-richest individual and the most public face of Big Tech swagger.
James alleged Facebook had a practice of opening its site to third-party app developers, then abruptly cutting off developers that it saw as a threat. The lawsuit — which includes 46 states, Guam and the District of Columbia — accuses Facebook of anti-competitive conduct and using its market dominance to harvest consumer data and reap a fortune in advertising revenues.