U.S. and States Say Facebook Illegally Crushed Competition

click to enlarge U.S. and States Say Facebook Illegally Crushed Competition
Jim Wilson/The New York Times
The sign outside Facebook's headquarters in Menlo Park, Calif., July 15, 2020. The Federal Trade Commission and 48 states accused Facebook on Wednesday, December 9, of becoming a social media monopoly by illegally squashing competition by buying up its rivals.

By Cecilia Kang and Mike Isaac
The New York Times

WASHINGTON — The Federal Trade Commission and more than 40 states accused Facebook on Wednesday of becoming a social media monopoly by buying up its rivals to illegally squash competition, and said the deals that turned the social network into a behemoth should be unwound.

Federal and state regulators, who have been investigating the company for over 18 months, said in separate lawsuits that Facebook’s purchases, especially Instagram for $1 billion in 2012 and WhatsApp for $19 billion two years later, eliminated competition that could have one day challenged the company’s dominance.

Since those deals, Instagram and WhatsApp have skyrocketed in popularity, giving Facebook control over three of the world’s most popular social media and messaging apps.

The prosecutors called for Facebook to break off Instagram and WhatsApp and for new restrictions on future deals.

The lawsuits, filed in the U.S. District Court of the District of Columbia, underscore the growing bipartisan and international tsunami against Big Tech. Lawmakers and regulators have zeroed in on the grip that Facebook, Google, Amazon and Apple maintain on commerce, electronics, social networking, search and online advertising, remaking the nation’s economy.

The investigations already led to a lawsuit against Google, brought by the Justice Department two months ago, that accuses the search giant of illegally protecting a monopoly. At least one more suit against Google is expected by the end of the year. In Europe, regulators are proposing tougher laws against the industry and have issued billions of dollars in penalties for the violation of competition laws.

Facebook has long denied any illegal anticompetitive behavior and is expected to use its deep well of money to defend itself. Few major antitrust cases have centered on mergers approved years earlier. The FTC signed off on Facebook’s deals for Instagram and WhatsApp during Barack Obama's administration.

If the prosecutors succeed, the cases could remake the company, which has experienced only unfettered growth. Mark Zuckerberg, Facebook’s chief executive, has described a breakup of the company as an “existential” threat.

Facebook did not immediately respond to a request for comment, but it has argued in the past that the market for social media remained competitive.

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