US Trade Regulator, States File Antitrust Lawsuit Against Facebook

Google is also facing heat with the US Dept of Justice filing a landmark antitrust lawsuit against it in October.

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Policy
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The United States’ trade regulator, Federal Trade Commission and more than 40 states accused Facebook on Wednesday, 9 December of buying up its rivals to illegally squash competition
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The United States’ trade regulator, Federal Trade Commission, and more than 40 states accused Facebook on Wednesday, 9 December, of buying up its rivals to illegally squash competition, The New York Times reported.

According to the report, they called for the deals to be unwound, escalating regulators’ battle against the biggest tech companies in a way that could remake the social media industry.

The lawsuit, filed in the US District Court for the District of Columbia, comes on the heels of three hearings from US Congress that Facebook has had to testify in since July, all of which have seen CEO Mark Zuckerberg bombarded by lawmakers on anti-competitive behaviour.

“Federal and state regulators of both parties, who have investigated 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,” NYT reported.

IS ONLY FACEBOOK FACING CHARGES?

No, Google is already facing heat from the US Justice department. After a year of investigation into Google’s business practices, the United States Department of Justice filed a landmark antitrust lawsuit against the tech giant in October.

The Justice Department, describing Google as a “monopoly gatekeeper for the internet,” has alleged in its 64-page lawsuit that the $1 trillion company is “unlawfully maintaining monopolies in the markets for general search services, search advertising, and general search text advertising in the United States.”

The agency has accused Google of blocking competition and preventing other search engines from scaling their services by entering into exclusive agreements with device manufacturers like Apple and Samsung as well as telecom service providers.

CAN INSTAGRAM & WHATSAPP BE BROKEN UP?

Prosecutors demanded Facebook should break off Instagram and WhatsApp into separate entities. Moreover, they said new restrictions should apply to the company on future deals. Those are some of the most severe penalties regulators can demand. Facebook said it planned to vigorously defend itself against the accusations.

“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,” NYT quoted Attorney General Letitia James of New York, as saying.

James is a Democrat who led the multistate investigation into the company in parallel with the federal agency, which is overseen by a Republican.

WHAT’S FACEBOOK SAYING?

Facebook, in its response, said the regulators had ignored important history.

According to the NYT report, Jennifer Newstead, Facebook’s general counsel, said in a statement. “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. 

Facebook has also pointed towards the growth of short video apps like TikTok and conservative platforms like Parler to argue that they do not have a monopoly over social media.

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