The federal and 46 state governments filed a class action lawsuit against Facebook on Wednesday, accusing the company of abusing its leading position in the social media market to suppress competitors. The plaintiffs, among other things, are seeking the court to force Facebook to get rid of the WhatsApp messenger and the Instagram social network controlled by the company.
Antitrust lawsuits against Facebook announced today by the Federal Trade Commission (FTC) and New York State Attorney General Letisha James are the second round of government action against previously seemingly untouchable tech giants. Recall that in October this year, the Department of Justice filed a lawsuit against Google for abuse of its dominant position in the field of online search and advertising on the Internet.
Amazon and Apple are also under investigation by Congress and federal authorities on charges of infringing on competitors. The New York Attorney General said at a press conference on Wednesday about the need to “stop unreasonably aggressive takeover practices and restore confidence in the market.”
The FTC believes that Facebook is systematically eliminating competitors by simply acquiring small and promising companies, as was the case with Instagram in 2012 and WhatsApp in 2014.
According to Letitia James, Facebook “uses its monopoly to eliminate smaller rivals and suppress competitors at the expense of ordinary users.”
The Commission fined Facebook $ 5 billion in 2019 for violating user privacy and introduced new controls and restrictions on the company. The largest fine the FTC has ever imposed on tech companies has had little impact on Facebook.
Representatives of Facebook called the actions of the authorities “revisionism” and said that the government is punishing successful businesses, recalling that it was the FTC that several years ago gave the company permission to buy Instagram and WhatsApp.
Facebook is the largest social network in the world with about 2.7 billion users. With an estimated market value of $ 800 billion, CEO Mark Zuckerberg is one of the top 5 richest people in the world. James said that Facebook, among other things, practiced opening the site to third-party application developers, and then suddenly shutting down those that the company considered a threat to its monopoly position in the market.
The lawsuit, which was filed on behalf of authorities in 46 states, the island of Guam and the District of Columbia, accused Facebook of crushing competitors and using its dominant market position to collect consumer data and generate windfall advertising revenues.
North Carolina Attorney General Josh Stein believes that the Facebook lawsuit could revolutionize the social media market, as happened in the early 1980s with the telephone market, when AT&T’s monopoly in the industry was forcibly liquidated by court order.
“We hope to restructure the social media market in the United States, which currently has only one player,” Stein told reporters. James added that the coalition of states and territories worked in conjunction with the FTC, but the prosecutor’s review was separate from the FTC investigation.
The Justice Department’s lawsuit against Google, filed just two weeks before presidential election day, fueled accusations of political motivation, as it was initiated by US Attorney General William Barr, a longtime ally of President Donald Trump, who often criticizes Google. The FTC is an independent regulator whose board now includes three Republicans and two Democrats.
President-elect Joe Biden has previously stated the need to consider a possible divestiture of tech giants. Biden called Mark Zuckerberg “the real problem.”
Over the past 15 years, Facebook has absorbed, in addition to Instagram and WhatsApp, about 70 companies. The company paid a billion dollars for the social network Instagram. At that time, the app for publishing photos and short videos had about 30 million users and was not generating revenue. A few years later, Facebook acquired the WhatsApp messenger for $ 19 billion.
Zuckerberg previously promised that the two companies would operate independently of each other, but over the years, all three services have integrated with each other. Users can now link their accounts and share content across all platforms owned by Facebook. This tight integration can make it difficult to split Facebook’s business. More than a billion people all over the world use Instagram now.