The Federal Trade Commission and more than 40 states accused Facebook on Wednesday of buying up its rivals to illegally squash competition, and they called for the deals to be unwound, escalating regulators’ battle against the biggest tech companies in a way that could remake the social media industry.
Federal and state regulators of both parties, who have investigated the company for over 18 months, said in separate lawsuits that Facebook’s purchases, especially Instagram for $1 billion in 2012 and WhatsApp for $19 billion two years later, eliminated competition that could have one day challenged the company’s dominance. Since those deals, Instagram and WhatsApp have skyrocketed in popularity, giving Facebook control over three of the world’s most popular social media and messaging apps.
The applications have helped catapult Facebook from a company started in a college dorm room 16 years ago to an Internet powerhouse valued at more than $800 billion.The lawsuits, filed in the US District Court for the district of Columbia, underscore the growing bipartisan and international tsunami against Big Tech. Lawmakers and regulators have zeroed in on the grip that Facebook, Google, Amazon and Apple maintain on commerce, electronics, social networking, search and online advertising, remaking the nation’s economy.
President Trump has argued repeatedly that the tech giants have too much power and influence, and allies of President-elect Joseph R. Biden Jr. make similar complaints. The federal case against Facebook is widely expected to continue under Biden’s administration.
The investigations already led to a lawsuit against Google, brought by the justice department two months ago, that accuses the search giant of illegally protecting a monopoly.
Prosecutors in that case, though, stopped short of demanding that Google break off any parts of its business.
At least one more suit against Google, by both Republican and Democratic officials, is expected by the end of the year. In Europe, regulators are proposing tougher laws against the industry and have issued billions of dollars in penalties for the violation of competition laws.
Facebook, the prosecutors said Wednesday, should break off Instagram and WhatsApp, and they said new restrictions should apply to the company on future deals. Those are some of the most severe penalties regulators can demand. Facebook said it planned to vigorously defend itself against the accusations.
“For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users,” said attorney-general Letitia James of New York, a Democrat who led the multistate investigation into the company in parallel with the federal agency, which is overseen by a Republican.
The lawsuits against Facebook will set off a long legal battle. It has denied any illegal anticompetitive behaviour and has a deep well of money to put towards its defence.
Few major anti-trust cases have centered on mergers approved years earlier. The FTC did not block Facebook’s deals for Instagram and WhatsApp during the Obama administration.
If the prosecutors succeed, the cases could remake the company, which has experienced only unfettered growth. Mark Zuckerberg, Facebook’s chief executive, has described a breakup of the company as an “existential” threat. The company’s stock fell 2 per cent, to $277.70 a share, after the lawsuits were announced.
The case is also being widely watched as a gauge for future mergers within the technology industry, which have continued to boom during the pandemic. Last month, Facebook said it was buying Kustomer, a customer relationship management start-up, for close to $1 billion.
New York Times News Service
