The United States vs. Facebook
Facebook’s day of reckoning has come. The US Federal Trade Commission has filed a lawsuit against Facebook that seeks to split the social media giant from the image-sharing social network Instagram and messaging app WhatsApp. The FTC is also seeking to prohibit Facebook from imposing “anticompetitive conditions” on software developers and require Facebook to seek prior approval for future mergers and acquisitions. A separate lawsuit, led by New York Attorney General Letitia James and joined by 48 US states and territories (including the District of Columbia and Guam), lays out the case against Facebook in detail.
Facebook purchased Instagram for $1 billion in 2012 and WhatsApp for $19 billion in 2014. The FTC and the attorneys general claim that Facebook made both purchases to “eliminate threats to its monopoly.” They also claim that Facebook has engaged in anti-competitive practices against third-party developers by allowing access to certain APIs only if they agreed not to create features that would compete against Facebook.
Facebook responded by calling the lawsuits “revisionist history” because the FTC approved both mergers in the first place. That’s a fair point, but given the broad bipartisan support for the suit—how do you get 48 attorneys general to agree on anything?—it’s clear that there’s some serious political will to address the problem of Facebook’s dominant position in social media. Regardless, don’t expect anything to happen quickly—these sorts of cases and the appeals can drag on for years.
Approval at the time of an acquisition is NOT a “Get Out of Jail Free” card for subsequent behavior. What will count will be FB’s actions afterwards, and from what I read, some of FB’s actions are highly suspect/likely anti-competitive.
But “# of AGs joining a lawsuit” is not necessarily a good metric for legal validity. (May it please the court here, I enter into evidence the number of state AGs who have joined Texas in the Supreme Court challenge to the election…
) Rather, it’s a measure of political viability of the prosecution. There’s political points to be made these days for attacking Big Tech.
I agree that the FTC’s approval of the Instagram and WhatsApp acquisitions is not a guaranteed defense. I’m not enough of an antitrust expert to know exactly how this stuff is interpreted, but it seems to me that a company could easily end up in a problematic monopoly position without acquisitions (see Microsoft and Apple) so it’s more up to the FTC and the AGs (who could take different approaches) to show that Facebook’s overall behavior is anticompetitive.
And you have a point about the state AGs aiming to make political hay, but it’s still notable that they’re from both sides of the aisle, whereas the ones supporting the Texas suit are all Republican. But as you say, Big Tech has been generating enemies for a while now.
Regardless, we won’t be going down the rabbit hole of discussing the election anymore.
The Onion has a hot take.
I’m glad this is moving forward. The fact that 48 state AGs signed on to me also indicates this is going to go forward even past Jan 20 when Trump and his petty feud with Silicon Valley finally go away. I have to say though the whole thing leaves a bad taste in my mouth. These mergers should never have been approved in the first place (as I’ve argued before). Now having to go through years of court battles and spend millions of taxpayer $ just to correct the negligent behavior of the authority tasked with preventing this very thing from happening is a bit shameful IMHO.