The Federal Trade Commission recently announced a new antitrust lawsuit against social media giant Facebook. It alleged that the social network giant uses monopoly power “to suppress, neutralize and to deter serious competitive threats,” and as such, must be broken up. The lawsuit is separate from, though was investigated in collaborating with, one of the 48 attorneys generals announced recently.
Facebook Lawsuit 2020
Both the lawsuits allege that Facebook resorted to many illegal behavior patterns, which the states and federal investigators collaborated to characterize it. But the state lawsuit is more inclined to the violations at the state law level, while the Federal Trade Commission alleges the violation of federal laws. As such, while objecting to Facebook’s monopoly actions, the two lawsuits will be looked upon and adjudicated separately.
The allegations of both the lawsuits are similar that Facebook’s acquisitions of WhatsApp and Instagram both have illegal shutdowns of the nascent competitors by monopoly power. The media giant used to access its platform to prevent other competitors from growing.
FTC Lawsuit against Facebook explained
The FTC lawsuit and the state lawsuits both demand the acquisition of Instagram and WhatsApp to be retroactively judged as being illegal. It also deemed for the companies to be split off from the parent company Facebook. In addition to this, Facebook would also require seeking prior notice and approval for the mergers and acquisitions. The approvals should be acquired from both the FTC and state authorities, and specific activities like typing API access will also be prohibited.
Lawsuit against Facebook
In an official tweet, media giant Facebook stated that it is investigating the lawsuits, though disparaged them, as, “The government now wants a complete do-over with no regard for the impact would have on the broader business community.”
As the Federal Trade Commission states in its Q&A on the lawsuit, the action is not unprecedented or even unexpected. The process of approving the process of acquiring one company by another may present a few illegal qualities; however, it might involve many behind the scenes. An approved and consummate merger acquisition might be unwound if it is seen that it is executed on pretenses or observed later that it had been a part of illegal practices.
“The enforcement action by FTC challenges way beyond the acquisitions,” explains the Federal Trade Commission. “We are challenging several layered courses of conduct that constituted a monopolization process of the personal social networking market. As such, the FTC can and often challenges diverse consummated transactions when they see a violation of the laws. Identifying anti-competitive consummated and complete transactions is always a key part of the mandate of the Technology Enforcement Division since the day it was formed in February 2019 as the Technology Task Force.”
The acquisition filings are only the first part of the long multiyear process, one spanning across two administrations, which will have slow proceedings. The next step most probably will be a direct PR push from Facebook portraying and explaining its innocence.