The FTC accuses Facebook of violating antitrust law by buying up competitors such as WhatsApp and Instagram and depriving consumers of alternatives that would better protect their privacy. The federal-level lawsuit is similar to a separate antitrust suit filed by 46 state attorneys general, led by New York.
The suits claim Facebook bought WhatsApp, Instagram and several other smaller tech companies in an attempt to eliminate competition.
“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’s lawsuit stated.
Speaking on behalf of the attorneys general, New York Attorney General Letitia James said “Almost every state in this nation has joined this bipartisan lawsuit because Facebook’s efforts to dominate the market were as illegal as they were harmful.
James went on to add that no company should have “this much unchecked power over our personal information and our social interactions” and that “millions of small businesses have been hurt by Facebook’s illegal behavior”.
Facebook’s general counsel Jennifer Newstead called the lawsuits “revisionist history” and said antitrust laws do not exist to punish “successful companies.” She said WhatsApp and Instagram have succeeded after Facebook invested billions of dollars in growing the apps.
If the FTC and the states are successful in proving Facebook violated antitrust laws, a judge could order the breakup of the company and force it to sell off both Instagram and WhatsApp.
But several industry experts say the likelihood of Facebook being forced to break up is slim.
In an interview with Reuters, Seth Bloom of Bloom Strategic Counsel said the FTC complaint was “significantly weaker” than the DOJ’s lawsuit against Google.
“We’re talking about acquisitions that are six or eight years old and it will be difficult for a court to order divestitures of many years ago,” Bloom said.
Investors echoed similar concerns.
“I do not know if the FTC or DOJ will be successful in breaking Facebook up. I’m assuming this will be dragged out in the courts as FB defends itself,” said Daniel Morgan, a portfolio manager at Synovus Trust in Atlanta, Georgia.
The FTC’s case has support from both Republicans and Democrats. President Donald Trump has used his authority to increase regulatory pressure on tech companies. The push is expected to continue under President-elect Joe Biden as the power of internet platforms has become a rare issue that’s raised concerns from both parties.
The Facebook case comes on the heels of the Justice Department’s October complaint against Alphabet Inc.’s Google for allegedly abusing its monopoly in internet search by using exclusive distribution agreements with phone manufacturers to lock out competitors from the market.