Facebook Antitrust Lawsuit: To Break The Monopoly

Antitrust Lawsuit is back again. And this time the target is just one tech giant in particular — Facebook.

The Federal Trade Commission (FTC) along with many U.S. states have formally filed antitrust lawsuits against Facebook (FB), alleging that the company is illegally maintaining its personal social networking monopoly and is engaged in anticompetitive behavior.

The FTC is seeking a permanent injunction in federal court that could require the company to divest assets, including Instagram (purchased by FB in 2012) and WhatsApp (purchased in 2014), effectively breaking up Facebook. This could lead to Facebook being forced to sell both the platforms, if the states and the FTC win the case.

FTC argues

FTC has alleged that 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 the company does not or cannot acquire.

It added that after identifying two significant competitive threats to its dominant position — Instagram and WhatsApp — Facebook moved to squelch those threats by buying the companies, reflecting CEO Mark Zuckerberg’s view, expressed in a 2008 email, that ‘it is better to buy than compete.’

The complaint alleges that Facebook initially tried to compete with Instagram on the merits by improving its own offerings, but Facebook ultimately chose to buy Instagram rather than compete with it. It also alleges that WhatsApp had emerged as the clear global ‘category leader’ in mobile messaging which Facebook chose to buy an emerging threat rather than compete, and announced an agreement in February 2014 to acquire for $19 billion.

Facebook’s response

Facebook responded to the lawsuit saying that both the acquisitions were reviewed by relevant antitrust regulators at the time. Regulators correctly allowed these deals to move forward because they did not threaten competition.

The company said firms are allowed to choose their business partners, and it gives platforms comfort that they can open access to other developers. YouTube, Twitter and WeChat, for example, have done just fine without our platform. Significantly, Facebook did nothing to prevent any apps from offering their services on their own sites or anywhere else on the internet, it added.

It ended the press release by saying that — We look forward to our day in court, when we’re confident the evidence will show that Facebook, Instagram, and WhatsApp belong together, competing on the merits with great products.

Officials vs tech giants

It is not the first time we are hearing about an antitrust lawsuit being filed against a technology company. In fact, last year has been known for various antitrust cases against the tech giants like Google, Facebook, Apple, Amazon. The U.S. officials seem to have been increasingly probing the tech sector, alleging them for anticompetitive behaviour.

An antitrust case against Google has been going on for a while now. Microsoft’s antitrust case in early 2000 took years to play out and settle. This antitrust lawsuit case may also take years to resolve. However, If FTC wins and the divestment happens, it will be crucial to see how Facebook’s growth story would turn around as WhatsApp and Instagram give the company a larger footprint, user base, and revenue.

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