Facebook has received a couple of early Christmas presents this season. The Federal Trade Commission (FTC) and a coalition of states and territories have gifted the Big Tech giant two lumps of coal in the form of antitrust lawsuits.
Both the FTC, and a coalition of 46 states, the District of Columbia and Guam, filed separately, lawsuits against the social media giant Facebook on Dec. 9.
The state and territory coalition comprised every state except South Carolina, Alabama, South Dakota and Georgia. The effort was spearheaded by New York Attorney General Letitia James.
The complaints both primarily focus on Facebook’s acquisitions of Instagram and Whatsapp. The complaint filed by the 48 attorneys general argued that acquiring Instagram “would make it difficult for an Instagram alternative to break into the market and challenge Instagram’s position—or Facebook’s.” The FTC’s complaint claimed: “Facebook has maintained its monopoly position by buying up companies that present competitive threats and by imposing restrictive policies that unjustifiably hinder actual or potential rivals that Facebook does not or cannot acquire.”
“The Instagram acquisition has given Facebook control over its most significant personal social networking competitor, which both neutralizes the direct threat that Instagram posed by itself, and, additionally, makes it more difficult for other firms to use photo-sharing via smartphones to gain traction in personal social networking,” the FTC complaint alleged.
As previously noted, Instagram was not the only potential competitor that Facebook went after. “Just as with Instagram, WhatsApp presented a powerful threat to Facebook’s personal social networking monopoly, which Facebook targeted for acquisition rather than competition,” according to the FTC complaint.
Both complaints also examined Facebook’s acquisition of a user surveillance company called Onavo. The state and territory coalition complaint mentioned Eyegroove, which “allowed users to create and share music videos with augmented reality effects” before Facebook acquired the company and then shut it down.
The FTC complaint requested as part of its recommended remedy: a “divestiture of assets, divestiture or reconstruction of businesses (including, but not limited to, Instagram and/or WhatsApp) and such other relief sufficient to restore the competition that would exist absent the conduct alleged in the Complaint, including, to the extent reasonably necessary, the provision of ongoing support or services from Facebook to one or more viable and independent business(es).”
Facebook fired back in response to the lawsuits with a blog post, claiming:
“We face competition in every aspect of our business. That was true before the acquisitions of Instagram and WhatsApp and remains true today. With so many rivals, our customers can at any time choose to move to another product or service — and sometimes they do. The lawsuits ignore this reality.”
These lawsuits are a first step toward taking action against Facebook’s alleged anticompetitive practices. It appears as though the federal, state and territory governments that have filed are in agreement that Facebook should not be allowed to harm the American people with anticompetitive practices.
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