THE NEUTRAL ZONE
Federal regulators sued to break up Facebook, accusing the company of abusing its substantial market power to crush smaller competitors. Lawsuits were announced by a group of 48 states and territories as well as the Federal Trade Commission.
“No company should have this much unchecked power,” New York Attorney General Letitia James said in a press conference announcing the suit. In a press release, she described Facebook as a monopoly targeting competitors with a “buy or bury” approach beginning in 2011. The legal complaint asked the court to halt Facebook’s anti-competitive actions and stop it from making acquisitions valued at or over $10 million without advance notice given to the states.
The trade commission in its complaint pushed Facebook to divest from WhatsApp and Instagram. The complaint accused Facebook of buying WhatsApp and Instagram to neutralize the risk of theapps competing with them.
In a tweet, Facebook said the federal government had no regard for the impact that precedent would have on businesses or consumers. In a press release, Facebook emphasized advancements made in Instagram and WhatsApp and said forcing the sale of them could have a “chilling effect” on future improvements.
If Facebook is forced to divest from WhatsApp, it could cause Facebook to lose out on the chance to capture consumer spending in markets such as India and Brazil. In those markets, WhatsApp rivals or surpasses Facebook in popularity.
Antitrust expert Rebecca Allensworth, a law professor at Vanderbilt University, said it is “hard to win any antitrust lawsuit and this one is not any different.” The cases against Facebook are not sure victories. Prosecutors have to show WhatsApp and Instagram were bought explicitly to kill off competition. In addition, regulators did not stop the acquisitions from happening, so they have to explain what changed their minds. Lastly, states and the trade commission must prove the world would be better off without the mergers.
This section includes an aggregation of articles showing different viewpoints on the topic.
The Facebook Lawsuits Explained – New York Times – 12/10/2020
Lawsuits like this might take years to resolve. Your experience with Facebook, Instagram, WhatsApp or Messenger won’t suddenly be different tomorrow. The more immediate impact from this legal fight could be subtle changes to these social apps because Facebook has one eye on its court cases.
Feds, States Sue to Break Up Facebook – National Review – 12/9/2020
The FTC is seeking “divestiture of [Facebook] assets, divestiture or reconstruction of businesses (including, but not limited to, Instagram and/or WhatsApp), and such other relief sufficient to restore the competition that would exist absent the conduct alleged in the Complaint.”
Why the US government wants Facebook to sell off Instagram and WhatsApp – Vox – 12/9/2020
It’s a compelling argument, William Kovacic, a former FTC member and a professor of law and policy at George Washington University, told Recode. “Both of them are premised on the idea that the main source of dominance for Facebook was the acquisitions of Instagram and WhatsApp in particular, and that those are the key pillars of the company’s current market position. And the only way to repair that is to create a new enterprise.”
FTC and 48 states file antitrust lawsuits against ‘anticompetitive’ Facebook – The Washington Times – 12/9/2020
The Federal Trade Commission and 48 states filed lawsuits against Facebook on Wednesday alleging that the company engaged in unlawful behavior to eliminate its competition in social networking. The FTC wants a federal judge to grant an injunction that could require Facebook to divest its assets, Instagram and WhatsApp.
This section includes an aggregation of tweets showing different viewpoints on the topic.