Facebook May Have to Break Apart Says FTC

On Wednesday social media giant Facebook was hit with antitrust suits by 48 U.S. attorneys general and the The Federal Trade Commission (FTC).

Facebook is now the second big tech company to be hit with such lawsuits and has been alleged of violating antitrust law.

According to the AGs, Facebook’s violations result from its buying up of competitors and depriving consumers of alternatives that would better protect their privacy.

The FTC also filed a suit against the company saying it violates antitrust laws.

Both lawsuits are claiming that Facebook’s purchases of Instagram for $1 billion in 2012 and WhatsApp for $19 billion in 2014, as well as other small tech companies, has quashed out competition.

With 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,’” read the FTC lawsuit.

“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,” remared New York Attorney General Letitia James.

In November at a Senate hearing, Facebooks CEO Mark Zuckerberg had downplayed the acquisition of Instagram and said, “At the time, I don’t think we or anyone else viewed Instagram as a competitor as a kind of large multipurpose social platform. 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.”

Facebook’s general counsel, Jennifer Newstead said that the FTC’s lawsuit is “revisionist history.” The commission afterall had pproved 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.

The company had said that it had invested “billions of dollars and millions of hours” to make WhatsApp and Instagram into even more valuable services than they were when Facebook acquired them.

“We believed these companies would be a great benefit to our Facebook users and that we could help transform them into something even better. And we did,” Facebook said. “People around the world choose to use our products not because they have to, but because we make their lives better.”

“If the case is successful, it would dramatically alter how competition in the social network space works,” said Michael Kades, an antitrust expert at the Washington Center for Equitable Growth.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.