What you need to know
- The Federal Trade Commission has filed litigation against Facebook after a year-long investigation.
- Facebook is alleged to have practiced anticompetitive behavior by purchasing Instagram and WhatsApp, companies that Facebook's executives were threatened by.
- The lawsuits call for Facebook to divest both Instagram and WhatsApp.
The FTC today filed litigation against Facebook on the grounds that it has practiced anticompetitive behavior. The claims by the FTC allege that Facebook has managed to maintain a monopoly that began with the company's acquisition of Instagram in 2012, followed by its purchase of WhatsApp in 2014. The lawsuits call for Facebook to strip ownership of both applications and would require regulatory approval for any future acquisitions.
The complaints surrounding Facebook's conduct allege that it would purchase companies that it felt threatened by, stating that it would rather buy other popular apps than compete with them. According to an investigation by a House Judiciary subcommittee, Facebook was worried about Instagram's popularity, and Instagram's co-founder, Kevin Systrom, was worried that Mark Zuckerberg would go into "destroy mode" if they didn't sell. Similarly, Facebook's executives were allegedly worried about the success of "over-the-top" messaging apps like WhatsApp and how they affected the company's leadership position.
Facebook is also alleged to have imposed an anticompetitive environment for software developers, requiring the use of APIs that only work with its services and discouraging any connection or promotion of any other services not related to Facebook. The FTC highlighted the now-defunct Vine app, previously owned by Twitter. Facebook had removed the API that would allow Vine users access to their Facebook friends through the app.
The FTC began its antitrust investigation against Facebook back in July of 2019, shortly after slapping the company with a $5 billion fine over its privacy dealings. New York Attorney General Letitia James, who leads the lawsuit, states that "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."
Facebook and Google are currently facing increased antitrust regulations in the UK.
Derrek is a long-time Nokia and LG fanboy who loves astronomy, videography, and sci-fi movies. When he's not working, he's most likely working out or smoldering at the camera.
Didn’t the government already approve this deal? So why the change of heart
According to another article, the FTC said a proper approval doesn't guarantee that the issue cannot be revisited. My first thought though is how does the FTC distinguish between merging for anti-competetive reasons and merging to enhance or add the business's portfolio. Instagram had been integrated to some degree. Not sure about what's app.
I'm guessing they distinguish by looking at the fact that Facebook as a company and Zuckerberg himself literally said they were acquired for anticompetitive reasons.
I'm not exactly sure and am definitely not anything close to a lawyer. Having said that, I'd say it's because the evidence presented at the House Judiciary hearings showed that Facebook played dirty pool and threatened Instagram into selling. It's good to get to the bottom of that if nothing else. Too bad it'll end up costing taxpayers millions of dollars.
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