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States, FTC suing Facebook over alleged antitrust violations

FTC suit alleges Facebook has engaged in "systematic strategy" to eliminate competition

Updated: December 9, 2020 - 5:54pm

The Facts Inside Our Reporter’s Notebook

Dozens of states and federal antitrust authorities filed antitrust lawsuits Wednesday claiming Facebook is illegally squashed competitors and buying up-and-coming social media platforms to secure its online dominance.

New York Attorney General Tish James announced the lawsuit brought by 48 states and district, in a virtual news conference.

“It’s really critically important that we block this predatory acquisition of companies and that we restore confidence to the market,” Tish said.

The Federal Trade Commission filled a separate suit Wednesday in federal court also asked for Facebook to be ordered to divest its Instagram and WhatsApp messaging services and arguing that the social media giant is abusing its market power in social networking to crush smaller competitors.

The FTC is seeking the separation of the services from Facebook, saying the platform has engaged in a “systematic strategy” to eliminate its competition – including by purchasing smaller, burgeoning rivals like Instagram in 2012 and WhatsApp in 2014.

James made similar arguments in her press conference, saying Facebook “used its monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users," according to the Associated Press

Facebook is the world’s biggest social network with 2.7 billion users and a nearly $800 billion market value.

Company CEO Mark Zuckerberg is the world’s fifth-richest person and was a pioneer in the social media industry.

James alleged Facebook had a practice of opening its site to third-party app developers, then abruptly cutting off developers that it saw as a threat.

The lawsuit  – which includes 46 states, Guam and the District of Columbia – alleges Facebook of anti-competitive conduct and using its market dominance to harvest consumer data and reap a fortune in advertising revenues.

James also said the coalition worked collaboratively with the FTC but made clear the attorneys general conducted their own, separate investigation. 

Facebook paid $1 billion for Instagram, bolstering the social networking platform’s portfolio a month before its stock went public. At the time, the photo-sharing app had about 30 million users and wasn’t producing any revenue. Zuckerberg vowed both companies would be run independently, but over the years the services have become increasingly integrated with users able to link accounts and share content across the platforms. Instagram now has more than 1 billion users worldwide. Facebook acquired WhatsApp, an encrypted messaging service, for $19 billion, the wire service also reported.