US regulator moves on Facebook to break it up from Instagram, Whatsapp

Mariam Cheik-Hussein
By Mariam Cheik-Hussein | 10 December 2020

The US Federal Trade Commission (FTC) is suing Facebook for alleged anti-competitive behaviour, and is seeking to break up the social media giant from Instagram and WhatsApp.

The lawsuit claims that Facebook has engaged in a “systematic strategy” to eliminate threats to its monopoly, including its 2012 acquisition of Instagram and 2014 acquisition of WhatsApp, as well the anti-competitive conditions on software developers.

The federal regulator says Facebook’s behaviour has harmed consumers’ choice and deprives advertisers of the benefits of competition.

The FTC is seeking a permanent injunction in federal court that could force Facebook to divest from Instagram and WhatsApp, and require Facebook to seek prior notice and approval for future mergers and acquisitions.

“Personal social networking is central to the lives of millions of Americans,” says Ian Conner, director of the FTC’s Bureau of Competition.

“Facebook’s actions to entrench and maintain its monopoly deny consumers the benefits of competition. Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive.”

In a separate lawsuit, but in coordination with the FTC, 48 state attorney generals are alleging Facebook continues to “illegally” stifle competition to protect its monopoly. The lawsuit was filed at the same time as the FTC’s but stops short of calling for the break up of Facebook.

“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,” says Attorney General Letitia James.

“Today, we are taking action to stand up for the millions of consumers and many small businesses that have been harmed by Facebook’s illegal behavior.”

Facebook stock fell by more than 5% by the close of market in the US.

In a public statement, Facebook said it was reviewing the complaints.

“Years after the FTC cleared our acquisitions, the government now wants a do-over with no regard for the impact that precedent would have on the broader business community or the people who choose our products every day,” Facebook says.

Earlier this year, the US House of Representatives’ antitrust subcommittee hearing revealed emails from Zuckerberg in which he spoke to Facebook’s chief financial officer David Ebersman about his intent to purchase Instagram.

“One way of looking at this is that what we’re really buying is time. Even if some new competitors springs up, buying Instagram, Path, Foursquare, etc now will give us a year or more to integrate their dynamics before anyone can get close to their scale again. Within that time, if we incorporate the social mechanics they were using, those new products won’t get much traction since we’ll already have their mechanics deployed at scale,” the email read.

According to reports, Zuckerberg followed up less than an hour later saying he “didn’t mean to imply that we’d be buying them to prevent them from competing with us in any way.”

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