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Silicon Valley

Facebook is now officially too powerful, says the US government

Regulators filed a lawsuit claiming that the company has a monopoly on social networking and should divest itself of Instagram and WhatsApp.

December 9, 2020
Facebook CEO Mark Zuckerberg has given evidence to Congress on the company's business several times, including at this hearing in October 2019.
Facebook CEO Mark Zuckerberg has given evidence to Congress on the company's business several times, including at this hearing in October 2019.
Facebook CEO Mark Zuckerberg has given evidence to Congress on the company's business several times, including at this hearing in October 2019.AP Photo/Andrew Harnik

What happened: The US Federal Trade Commission has filed an antitrust lawsuit against Facebook for its “anticompetitive conduct and unfair methods of competition.” That includes its 2012 acquisition of Instagram and 2014 acquisition of WhatsApp. Facebook, the FTC alleges, has a monopoly on social networking.  

“Since toppling early rival MySpace and achieving monopoly power, Facebook has turned to playing defense through anticompetitive means,” the FTC wrote in its suit. “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.’”

How we got here: Facebook has been under increased regulatory scrutiny in the US since 2017, when news reports revealed that the political data firm Cambridge Analytica had harvested Facebook user data without consent in the lead-up to the 2016 US presidential election. 

The FTC started its probe into Facebook’s privacy policies in March 2018, which resulted in a $5 billion fine. While this was the largest fine ever doled out to a technology company, it still represented only about 9% of the company’s 2018 revenue—and was roundly criticized by advocacy organizations and Democratic lawmakers because it did not come with conditions that required Facebook make any changes to its business practices. 

In recent months, the scrutiny has been increasing. Over the summer, House Democrats published a 449-page report on Apple, Amazon, Facebook, and Google’s monopolistic practices, arguing for increased enforcement of antitrust legislation. 

Then, in October, the Department of Justice filed an antitrust suit against Google, arguing that the company used unlawful methods to expand its search and advertising business. 

Why it matters: The DOJ suit against Google was already the most significant monopoly case filed in 20 years, and the twin lawsuits from the FTC and states are, at the very least, on par. 

Today’s action, which joined a separate lawsuit from 47 US states as well as Guam and the District of Columbia, has big repercussions for Facebook and could force it to sell off Instagram and WhatsApp. But it also portends a broader environment that is increasingly critical of the dominance of a handful of technology giants.

It could take years for these cases to make their way through the courts, but more lawsuits are coming. State attorneys general have said hat they will be filing their own lawsuits against Google in the coming weeks, as well as continuing additional scrutiny of Amazon and Apple.

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