FTC and States File Lawsuits That Aim to Break Up Facebook

After an 18+ month investigation, the Federal Trade Commission and regulators from 46 states have officially accused Facebook of anticompetitive behavior by purchasing rivals. The separate lawsuits were filed in the U.S. District Court for the District of Columbia. Facebook currently owns three major messaging apps and the suits call for the company’s purchase of Instagram (for $1 billion in 2012) and WhatsApp (for $19 billion in 2014) to be undone. Since the acquisitions, both messaging apps have exploded in popularity.

The New York Times reports that the lawsuits “underscore the growing bipartisan and international tsunami against Big Tech … [and that] the federal case against Facebook is widely expected to continue under [president-elect Joe] Biden’s administration.”

“For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users,” said New York attorney general Letitia James. The lawsuits are expected to “set up a long legal battle.” Facebook chief executive Mark Zuckerberg has said a breakup of the company is an “existential” threat; after the announcement of the suits, its stock fell 2 percent to $277.70 per share.

At the time Facebook purchased Instagram and WhatsApp, the FTC didn’t block the deals. Facebook general counsel Jennifer Newstead noted that, “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,” she added.

The FTC also accuses Facebook of “threatening to cut off third-party software developers from plugging into the social network if they made competing products,” more proof of anticompetitive behavior.

At the FTC, director of the bureau of competition Ian Conner noted that, “our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive.”

Support for the lawsuits has been expressed by a bipartisan group, including representatives Ken Buck (R-Colorado), David Cicilline (D-Rhode Island) and others. FTC chair Joseph Simons, a Trump-appointed Republican, and the two Democratic commissioners voted to pursue the lawsuit, while the two remaining Republican commissioners voted against it.

The states that did not join in on the lawsuit against Facebook were Georgia, South Dakota, Alabama and South Carolina. The states’ lawsuit said that, “Facebook has coupled its acquisition strategy with exclusionary tactics that snuffed out competitive threats and sent the message to technology firms that, in the words of one participant, if you stepped into Facebook’s turf or resisted pressure to sell, Zuckerberg would go into ‘destroy mode,’ subjecting your business to the ‘wrath of Mark’.”

Related:
U.S. Crackdown on Facebook Gets Thumbs Up From EU’s Vestager, Bloomberg, 12/10/20