The year of the Big (Tech) Breakup
In 2022, the many lawsuits against monopolistic tech firms, starting with Facebook, will gain momentum
If 2021 was the year of the Great Resignation, then 2022 is likely to be the year of the Great Breakup. After many years of slow build-up, the US government is taking on the Big Tech firms.
It won’t conclude this year — big corporates have big budgets for big lawyers — but this is the beginning of the beginning.
In November the US’s Federal Trade Commission (FTC) refiled its case against Facebook, now called Meta Platforms, alleging that the social giant “interfered with the competitive process by targeting nascent threats through exclusionary conduct”.
Facebook had recognised that the “transition to mobile posed an existential challenge” and it only had “a brief window of time to stymie emerging mobile threats”, says the FTC’s new filing of its lawsuit, which was initially dismissed by the judge, who asked for more specific information.
“Failing to compete on business talent, Facebook developed a plan to maintain its dominant position by acquiring companies that could emerge as, or aid, competitive threats. By buying up these companies, Facebook eliminated the possibility that rivals might harness the power of the mobile internet to challenge Facebook’s dominance.”
That is the very definition of anticompetitive behaviour, using your market dominance to prevent competition. Instead of innovating itself, Facebook bought Instagram in 2012 for a then eye-watering $1bn and then in 2014 spent an even more eyewatering $19bn on WhatsApp.
The social giant knew its young users were leaving Facebook Blue, as it is called internally, because they didn’t want to hang around on the same social network as their parents and grandparents. The cool kids were on Instagram, evolving from text updates to photographs, as social media evolved. So Facebook bought Instagram. Then, when it realised WhatsApp was an infinitely more popular messaging app than its own clunky Messenger, it snapped WhatsApp up too. That is pretty anticompetitive, or antitrust, as the US calls it.
When Facebook started integrating the back-end software for all three disparate messaging apps a few years ago, it was met with increasing revolt — including last year’s now infamous demand that users on WhatsApp agree to the terms for Facebook’s existing e-commerce customers so that they could directly market to WhatsApp users. The FTC wants Meta to sell WhatsApp and Instagram.
WhatsApp now has over 2-billion users, while Instagram and Messenger each have over 1-billion. Facebook, with 2.8-billion monthly active users itself, therefore controls the social media and messaging apps for half the 7-billion people on the planet.
This is the year in which retribution will gain momentum — beginning with the antitrust court case, and perhaps ending with criminal charges against social media executives.
It’s been a long time coming. Let’s hope it was worth the wait.
‘By buying up these companies, Facebook eliminated the possibility that rivals might challenge its dominance’