In 16 years of history from Harvard’s dorm to household name, Facebook now faces the biggest challenge of its life.
The US government is adamant on holding the Big Tech accountable for the impact they create on the market. After filing a landmark federal lawsuit against Google earlier in October this year, the Federal Trade Commission (FTC) has now come together with 46 states to file twin landmark Antitrust lawsuits against Facebook. The litigation accuses the social media behemoth of leveraging unfair practices to maintain monopoly in the industry.
Facebook’s actions to entrench and maintain its monopoly deny consumers the benefits of competition.Ian Conner, Director of the FTC’s Bureau of Competition
The key ground for FTC and the states to evince the allegations made in the antitrust lawsuit is acquisition of Instagram and WhatsApp by Facebook states that the company, under CEO Mark Zuckerberg, has deliberately choked competition thereby harming consumers and their privacy. The antitrust regulators are demanding the court to pressurize the Silicon Valley’s golden company to sell off the Instagram and WhatsApp.
In its defense, Facebook said that acquisition of Instagram and WhatsApp was previously approved by FTC.
Can this antitrust battle push Facebook to the backseat?
The Vice President and General Counsel of Facebook Jennifer Newstead said, “The government now wants a do-over, sending a chilling warning to American business that no sale is ever final.” Newstead then went on to state that users and small businesses choose to use Facebook’s “free services and advertising” because they “deliver the most value”, and not “because they have to”. He went on to say that Facebook plans to “vigorously defend people’s ability to continue making that choice.”
The trouble for the social media giant is not momentary. Instead, the lawsuit will most likely continue during the presidency of Joe Biden. This is because the Republican Chairman of FTC Joseph Simons was joined by two Democrats in favor of the suit. The lawsuit is the result of an year-long investigation and the news about FTC preparing for a litigation that will sweat the company, first came in September this year.
Watch: Facebook issues statement on antitrust lawsuits
In the twin lawsuit filed by FTC and 46 states, Facebook has been accused of buying rather than competing with the businesses that appear promising in the future. Another allegation by the states that the lawsuit puts light is unsafe data collection and privacy breach due to Facebook’s monopolistic control over the industry.
To this, Mark Zuckerberg responded by saying that Facebook spent millions for development of Instagram and WhatsApp after it acquired them. The companies weren’t as successful before Facebook bought them but Facebook made them successful over months.
The History of Facebook’s Mega Acquisitions
When Facebook acquired Instagram and WhatsApp, the deal was reviewed and approved by the Federal Trade Commission in 2012 and 2014 respectively. The company has also acquired more than dozen other businesses and firms, all of which had passed the government clearance at the time.
It is not the first time that Facebook is facing the wrath of FTC. The last time the Federal Trade Commission (FTC) decided to place stumbling stones in the upward graph of the tech giant, it imposed a fine of $5 billion on the company for privacy violation. This fine, imposed on Facebook in 2019, was accompanied by restrictions and new oversight. However, Facebook hardly suffered.
Lawsuits like these are almost impossible to win (take Microsoft’s example) and if Facebook loses this one, it might result in the Instagram and WhatsApp spin off. Facebook spent a sum of $1 billion to acquire Instagram soon after which, the stocks of the company went skyrocket. During that time, Instagram hardly made any revenues with 30 million users around the world. Two years later, Facebook also acquired WhatsApp for $19 billion.You will find more infographics at Statista
However, during the purchase of the companies, the social media giant pledged that both Instagram and WhatsApp will work as independent entities and in no way will be integrated with Facebook. But the applications have now steadily become more integrated than ever.