The US federal government and 46 states have sued Facebook on the grounds that it is intimidating its competitors to maintain its dominance in the digital marketplace. The twin lawsuits, announced on Wednesday, revealed that Facebook’s activities, in recent times, amount to anti-competitive activities which can make it difficult for small businesses to grow.
The Federal Trade Commission as a part of the lawsuit is aiming for an injunction that would permanently split the assets of Facebook. This means that companies that Facebook acquired such as WhatsApp and Instagram would no longer be a part of the company if the court injunction is granted. The state governments are also calling for the company to be broken up.
“Every American should be free to choose their preferred social media platforms,” Ian Conner, Director of the bureau of competition, a part of the Trade Commission, said. “Facebook on its parts has been seeking to maintain its Monopoly, thereby, denying Americans their rights to choose other platforms. The goal of the lawsuit is to end the company’s anticompetitive behavior and bring back competition so that other companies with the right innovation and competitive spirit can survive.”
The two lawsuits focus on Facebook’s acquisition of former competitors Instagram and WhatsApp. The company acquired Instagram for $1 billion in 2012, and in 2014 acquired WhatsApp for $19 billion. In October 2019, Letitia James, the Attorney General of New York, announced that she and other attorney generals were conducting investigations on the alleged anti-competitive practices of Facebook. The investigations and other such investigations culminated in Wednesday’s lawsuits.
James stated in a news release on Wednesday that Facebook has been dominating the industry by crushing small businesses and using anti-competitive practices to acquire or end its competitors. The attorney-general continued that the company has been using its unlimited resources to stop any company that is perceived to be a threat. The suit filed by the state governments is also mandating Facebook to report acquisitions worth $10million or more to state authorities.
“The Federal Trade Commission has failed to stipulate in its 53-page complaint that it authorized the acquisition of both Instagram and WhatsApp,” Facebook’s General Counsel, Jennifer Newstead, stated. “What the government is trying to do right now amounts to saying to American businesses ‘, hey, a sale is never final’, and that is just not right.”
Newstead also denied the allegations against Facebook stating that consumers that make use of the company’s services and those who advertise on the social media platform, do so not out of compulsion but because they get the best value for their money when they use Facebook.
William Kovacic, former head of the FTC, responded to Newstead’s statement that the commission might have approved the deal, and it still retains the right to withdraw such approval after considering new evidence. All 50 states with the exception of Georgia, South Carolina, Alabama, and South Dakota are involved in the state lawsuit against the tech giant.