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The FTC wants to break up Facebook

Daniel Howley and Alexis Keenan
·3 min read
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Wednesday, December 9, 2020

This article was first featured in Yahoo Finance Tech, a weekly newsletter highlighting our original content on the industry. Get it sent directly to your inbox every Wednesday by 4 p.m. ET. Subscribe

48 U.S. attorneys general and the FTC hit Facebook with antitrust suits

Facebook (FB) on Wednesday became the second Big Tech company to be slapped with an antitrust lawsuit, when a group of 48 U.S. attorneys general led by New York filed suit against the firm, alleging the social media giant is violating antitrust law. The AGs say Facebook’s violations result from its buying up of competitors and depriving consumers of alternatives that would better protect their privacy.

The Federal Trade Commission (FTC) also filed a suit against Facebook saying it violates antitrust laws.

At the heart of both lawsuits are claims that Facebook’s acquisitions of Instagram in 2012 for $1 billion and WhatsApp in 2014 for $19 billion, as well as other smaller technology companies, were carried out in order to quash competition. As part of its lawsuit, the FTC wants to force Facebook to break off both Instagram and WhatsApp.

“After identifying two significant competitive threats to its dominant position — Instagram and WhatsApp Facebook moved to squelch those threats by buying the companies, reflecting CEO Mark Zuckerberg’s view, expressed in a 2008 email, that ‘it is better to buy than compete,’” the FTC lawsuit stated.

Facebook is the largest social network in the world with 2.7 billion monthly active users across its four apps: Facebook, Messenger, Instagram, and WhatsApp.

“No company should have this much unchecked power over our personal information and our social interactions and that’s why we are taking action today and standing up for the millions of consumers and millions of small businesses that have been hurt by Facebook’s illegal behavior,” New York Attorney General Letitia James said on Wednesday.

In a Senate hearing in November, Facebook’s CEO downplayed the significance of the company’s Instagram acquisition. “At the time, I don’t think we or anyone else viewed Instagram as a competitor as a kind of large multipurpose social platform,” Zuckerberg said.

“In fact, people at the time kind of mocked our acquisition because they thought that we dramatically spent more money than we should have to acquire something that was viewed as primarily a camera and photo sharing app at the time.”

It’s worth noting that while the FTC is explicitly seeking to break up Facebook, the commission was also the agency that allowed the company to acquire both Instagram and WhatsApp. How the FTC will square that circle will be interesting to see.

Facebook’s general counsel, Jennifer Newstead, on Wednesday called the FTC’s lawsuit “revisionist history,” noting that the commission approved the acquisition of both WhatsApp and Instagram. “The government now wants a do-over, sending a chilling warning to American business that no sale is ever final,” she said.

By Daniel Howley and Alexis Keenan.

[Read the original, longer version of this article here.]

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