The Federal Trade Commission, along with over 40 states and Washington D.C., have accused Facebook of becoming a social media monopoly by “crushing smaller rivals”, according to separate lawsuits filed on Wednesday.
According to the New York Times, “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.”
The landmark lawsuits, led by the FTC and New York Attorney General Letitia James, are the most significant action taken against a U.S. company since the Justice Department sued Google in October for abusing online search and advertising placement protocols.
The U.S. government sued to break up Microsoft 19 years ago after Regulators found the company participated in anti-competitive measures with their position in the PC market. Amazon and Apple have since been investigated by congress for similar reasons.
Facebook, the world’s largest social media site with 2.7 billion users, has been asked by the FTC to sell off recent acquisitions Instagram and WhatsApp messaging services. The Feds says social giant engaged in a “systematic strategy” to eliminate its competition and used the illusion the companies were operating separately, when in reality, that led to users linking their accounts and funneling traffic back to Facebook.
“It’s really critically important that we block this predatory acquisition of companies and that we restore confidence to the market,” James said in a press conference
The FTC fined Facebook $5 billion in 2019 for privacy violations and instituted stricter oversight and restrictions on its business model. The largest ever fine against a tech company by the Feds that represents a mere 0.6% of the companies value which is currently at $800 billion. President-Elect Joe Biden has said the breakup of Big Tech should be seriously considered. He has called out Facebook’s CEO Mark Zuckerberg for scorn, calling him “a real problem.”
A message that wasn’t well-received by Facebook’s leadership group. “The government now wants a do-over, sending a chilling warning to American business that no sale is ever final,” Facebook general counsel Jennifer Newstead said in a statement.
Many analyst believe the lawsuits against Facebook is an important turning point against Big Tech and a chance for the U.S. Government to trying re-enforce antitrust laws. A court battle expected to last years between both sides.