Facebook faced a potential forced break up of its business, as the US Federal Trade Commission (FTC) and a coalition of 46 states filed lawsuits accusing the company of abusing a dominant position to eliminate competitors and stifle innovation.
During a press conference, New York attorney general Letitia James claimed Facebook used a “buy or bury” strategy to “crush smaller rivals”. She said this reduced consumer choice, hampered innovation and eroded privacy protections for “millions of Americans”.
James led the state action, with the District of Columbia and Guam also participating.
State attorney generals and the FTC cited Facebook’s acquisitions of Instagram in 2012 and WhatsApp in 2014 as prime examples of its predatory approach: the trade regulator stated the social media giant regarded both as threats to its “monopoly power” and opted to acquire them “rather than compete”.
In a tweet, Facebook said it was reviewing the complaints, but noted the government previously approved its acquisitions, arguing officials were now seeking a “do-over with no regard for the impact that precedent would have on the broader business community” or its users.
James highlighted the “extravagant” $19 billion paid for WhatsApp, which she said exceeded valuations from “industry experts and even Facebook itself”.
Facebook was also accused of imposing anti-competitive restrictions on third-party software developers, with the FTC claiming it made APIs available “only on the condition that they refrain from developing competing functionalities, and from connecting with or promoting other social networking services”.
The parties asked a district court to require Facebook to seek approval for future deals over $10 million; block it from imposing anti-competitive conditions on software developers; and force it to divest assets including Instagram and WhatsApp to restore competition.
James said “we are pretty confident that we will succeed”, pointing to separations of AT&T in 1984 and Microsoft in 2000 as precedents for the separation call.Subscribe to our daily newsletter Back