Big tech companies have come under a lot of scrutinies recently for anti-competitive behavior, both in the United States and across other countries abroad. Legislators have been calling for the break-up of large tech companies, such as Facebook, which has specifically gained criticism for acquiring services like Instagram and WhatsApp, in turn quashing competition.
The legal challenges for Facebook seem to have increased further, as the U.S. Federal Trade Commission (FTC), along with 48 state attorneys led by New York Attorney General Letitia James, has filed multiple lawsuits against the social media giant pertaining to the acquisition of Instagram and Facebook. The lawsuits claim that the company resorted to a “buy-or-bury” strategy to stifle competition through illegal ways. The acquisition, the lawsuit claims, gave Facebook the competitive edge and left users, advertisers, and businesses with fewer choices, making the social media firm a monopoly.
James said in a statement today:
“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[.] 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."
The lawsuit filings quote multiple statements made by founder Mark Zuckerberg at the time of the acquisition arguing that Instagram was a “threat”. The filings also cite internal employees celebrating the acquisition of WhatsApp, another former competitor to the social media giant’s messaging offerings. The filings also cite Facebook’s VP of Growth stating that the “biggest problem” was if WhatsApp was acquired by the likes of Google.
Other areas of conflict include the way the company provides access to its APIs and user data to third-party apps, including conditions that ask apps to “refrain from providing the same core functions that Facebook offers”. Such conduct helps the company “weaken and hinder” potential competition, making Facebook a monopoly in the social media and advertising space.
The FTC, along with the other attorneys, aims to get the company to sell Instagram and WhatsApp to “restore the competition” and prohibit the company from indulging in anti-competitive behavior. It also urges the courts to prevent the company from “imposing anticompetitive conditions on access to APIs and data”.
Facebook is yet to comment on these lawsuits. Zuckerberg has reportedly – in the past – said that he will defend such lawsuits aggressively as these prove to be “existential” threats to the company. Regardless, these legal challenges could signal the start of years of litigation.