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The FTC is suing Facebook to unwind its acquisitions of Instagram and WhatsApp
New York Attorney General Letitia James announced the lawsuit on Wednesday.
www.theverge.com
On Wednesday, New York Attorney General Letitia James announced a massive antitrust lawsuit against Facebook, claiming the social media giant has harmed competition by buying up smaller companies like Instagram and WhatsApp to squash the threat they posed to its business. Forty-seven other state and regional attorneys general are joining the suit.
The lawsuit centers on Facebook’s acquisitions, particularly its $1 billion purchase of Instagram in 2011. In addition to its acquisition strategy, the attorneys general allege that Facebook used the power and reach of its platform to stifle user growth for competing services.
“For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition,” James said in a press conference today. “Facebook used vast amounts of money to acquire potential rivals before they could threaten the company’s dominance.”
The Federal Trade Commission brought a separate lawsuit against Facebook on similar grounds, announced at the same time as the states’ lawsuit. The FTC case goes further than the state case, explicitly calling on the court to unwind the acquisitions of Instagram and WhatsApp, spinning off both into independent companies.
“Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive,” said Ian Conner, director of the FTC’s Bureau of Competition, in a statement.
The FTC case also echoes the state AGs’ claims about anticompetitive use of platform power, particularly Facebook’s practice of “cutting off API access to blunt perceived competitive threats.” The FTC case cites Facebook’s decision to block Vine’s friend-finding feature after the Twitter acquisition as a particularly flagrant instance of this behavior.
In a newsroom statement, Facebook said both acquisitions had been cleared by regulatory agencies and that overturning them after the fact would set a dangerous precedent. “Years after the FTC cleared our acquisitions, the government now wants a do-over with no regard for the impact that precedent would have on the broader business community or the people who choose our products every day,” the company said.