FTC Files Antitrust Lawsuit Against Facebook – Demands Breakup

The Federal Trade Commission (FTC) has filed an antitrust lawsuit against Facebook. They are seeking to break up the company.

If you are a critic of “big tech”, this week contains a particularly big highlight. The FTC has filed a lawsuit against social network site, Facebook. In the lawsuit, they call for the company to sell off assets.

NBCNews notes that those assets include WhatsApp and Instagram:

The Federal Trade Commission sued to break up Facebook on Wednesday, asking a federal court to force the sell-off of assets such as Instagram and WhatsApp as independent businesses.

“Facebook has maintained its monopoly position by buying up companies that present competitive threats and by imposing restrictive policies that unjustifiably hinder actual or potential rivals that Facebook does not or cannot acquire,” the commission said in the lawsuit filed in federal court in Washington, D.C.

The lawsuit asks the court to order the “divestiture of assets, divestiture or reconstruction of businesses (including, but not limited to, Instagram and/or WhatsApp),” as well as other possible relief the court might want to add.

The announcement is a major step that has been years in the making, with Facebook and several other major U.S. technology companies having grown quickly in the past 10 years with little government oversight.

The FTC isn’t alone in the lawsuit either. 48 state Attorneys General also joined the lawsuit, saying that various acquisitions made by Facebook amounts to “power grabs”. From NPR:

Wednesday’s lawsuits take particular aim at Facebook’s blockbuster acquisitions of photo-sharing app Instagram, for $1 billion in 2012, and messaging app WhatsApp, for $19 billion in 2014. Thanks in large part to the growth of the two hugely popular properties, more than 2.5 billion people use one of Facebook’s apps every day.

The attorneys general allege that the deals for Instagram and WhatsApp broke competition law. Prosecutors are asking a federal court to intervene by possibly forcing a sale or spinoff of those apps.

In addition, authorities are asking the court to prevent Facebook from making any acquisitions worth more than $10 million while the case proceeds.

This is the second time authorities have targeted the biggest players in the web and technology industry. Back in October, the US Justice Department filed an anti-trust lawsuit against Google. Many observers call that lawsuit a missed opportunity because the case against Google wound up being weak. Some even suggested that the lawsuit needed more time to develop, but Trump intervened and demanded some action prior to his now failed re-election campaign.

While the case against Google might be weak, the lawsuit against Facebook does appear to be much stronger. The acquisitions were made to retain a stranglehold on the social media industry. So many other industries wind up having to rely on Facebook and their respective services to gain a following. Attempting this outside of the Facebook ecosystem has grown increasingly difficult over the last decade. In fact, some third party services require Facebook login credentials to use even. Trying to succeed online without Facebook’s help – especially when you are in the news gig, while possible, is extremely difficult.

One thing is for sure: it’ll be interesting to see how this case moves forward. If successful, what will these smaller companies look like in the long run? While that is going to be left up to speculation at this stage, this is certainly a big development for the big players in technology.

Drew Wilson on Twitter: @icecube85 and Facebook.



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