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News

The FTC’s antitrust suit aims to break up Facebook

This article is a preview of The Logic’s Daily Briefing newsletter, sent every weekday. Sign up for a free trial.

The Federal Trade Commission (FTC) and a coalition of 48 state and territory attorneys general have filed two separate lawsuits against Facebook, alleging the social media giant has abused its dominance to snap up rival companies and, in the process, stifle competition, harm innovation and degrade user experience. 

News

The FTC’s antitrust suit aims to break up Facebook

By Catherine McIntyre
Facebook CEO Mark Zuckerberg testifies before a joint hearing of the Commerce and Judiciary Committees on Capitol Hill in Washington in April 2018. Photo: AP Photo/Alex Brandon
Dec 9, 2020
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This article is a preview of The Logic’s Daily Briefing newsletter, sent every weekday. Sign up for a free trial.

The Federal Trade Commission (FTC) and a coalition of 48 state and territory attorneys general have filed two separate lawsuits against Facebook, alleging the social media giant has abused its dominance to snap up rival companies and, in the process, stifle competition, harm innovation and degrade user experience. 

The claims: Both suits take aim at Facebook’s acquisitions of Instagram and WhatsApp, deals made in 2012 and 2014, respectively. “After identifying two significant competitive threats to its dominant position—Instagram and WhatsApp—Facebook moved to squelch those threats by buying the companies, reflecting CEO Mark Zuckerberg’s view, expressed in a 2008 email, that ‘it is better to buy than compete,’” the FTC wrote in its suit. While the states have likewise singled out Instagram and WhatsApp, the commission goes a step further in seeking a permanent injunction that could see Facebook forced to sell those platforms. In a press conference on Wednesday, New York Attorney General Letitia James said, “Any efforts to stifle competition, hurt small business, reduce innovation and creativity, cut privacy protections will be met with the full force of our offices.”

The context: Facebook first revealed in July 2019 that it was under investigation by the FTC; the coalition of states announced its probe in September that year. The lawsuits add to a growing portfolio of antitrust challenges against the social media platform. EU regulators are investigating the firm over anti-competition concerns related to its trove of personal data and its sales platform; in July, Facebook sued the European Commission for seeking information about the company beyond what it deemed necessary. The company—along with Alphabet, Apple and Amazon—was also subject to questioning before the U.S. Congress in July over its online dominance. In a report following the hearings, Congress concluded that Facebook acted as a monopoly by employing a “copy, acquire, kill” approach to its competition. 

The reaction: Senator and former presidential candidate Elizabeth Warren, a staunch critic of tech companies’ dominance, was among policymakers on both sides of the aisle to applaud the legal action, tweeting, “There’s more work to do, but this is a big step in the fight to #BreakUpBigTech.” 

Facebook general counsel Jennifer Newstead called the suits “revisionist history.” Antitrust laws “exist to protect consumers and promote innovation, not to punish successful businesses,” she said in a statement. “Instagram and WhatsApp became the incredible products they are today because Facebook invested billions of dollars, and years of innovation and expertise, to develop new features and better experiences for the millions who enjoy those products. The most important fact in this case, which the Commission does not mention in its 53-page complaint, is that it cleared these acquisitions years ago. The government now wants a do-over, sending a chilling warning to American business that no sale is ever final.” 

Facebook CEO Mark Zuckerberg previously told employees the company would fight any government efforts to break it up. “I don’t want to have a major lawsuit against our own government,” Zuckerberg said during an internal meeting in 2019. “But, look, at the end of the day, if someone’s going to try to threaten something that existential, you go to the mat and you fight.”

Taylor Owen, director of the Center for Media, Technology and Democracy at McGill University, told The Logic, “Any company under antitrust lawsuits from the Federal Trade Commission, and the attorneys general from 48 states investigating, should of course be worried.” However, Owen said that efforts to compel Facebook to unwind its Instagram and WhatsApp acquisitions could be difficult due to the company’s efforts to merge the backends of the three platforms. “If this suit were successful, consumers may ultimately benefit from more choice over how their social media platforms treat their personal data, moderate the content they are shown and how they engage in the digital economy.”

#Facebook #FTC

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Photo: AP Photo/Alex Brandon

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