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US FEDERAL REGULATORS have moved to sue Facebook, seeking forced divestment of its Instagram and WhatsApp messaging services.
In a separate case, 48 states and districts accused the company of abusing its market power in social networking to crush smaller competitors.
The anti-trust lawsuits were announced by the Federal Trade Commission and New York Attorney General Letitia James.
“It’s really critically important that we block this predatory acquisition of companies and that we restore confidence to the market,” James said during a press conference announcing the lawsuit.
The FTC said Facebook has engaged in a “a systematic strategy” to eliminate its competition, including by purchasing smaller up-and-coming rivals like Instagram in 2012 and WhatsApp in 2014.
James echoed that in her press conference, saying Facebook “used its monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users”.
Facebook is the world’s biggest social network with 2.7 billion users and a company with a market value of nearly $800 billion (€662 billion) whose CEO Mark Zuckerberg is the world’s fifth-richest individual and the most public face of Big Tech.
Facebook did not have immediate comment.
James alleged Facebook had a practice of opening its site to third-party app developers, then abruptly cutting off developers that it saw as a threat.
The lawsuit — which includes 46 states, Guam and the District of Columbia — accuses Facebook of anti-competitive conduct and using its market dominance to harvest consumer data and reap a fortune in advertising revenues.
“For years, Facebook has used its monopoly power as a social networking website to stifle competition and innovation and to sell alarming amounts of user data to make money, all at the expense of the many people who use its platform,” North Carolina Attorney General Josh Stein, who was on the executive committee of attorneys general conducting the investigation, said in a news release.
James said the coalition worked collaboratively with the FTC but noted the attorneys general conducted their investigation separately.
Facebook paid $1 billion (€827 million) for Instagram, bolstering the social networking platform’s portfolio a month before its stock went public. At the time, the photo-sharing app had about 30 million users and was not producing any revenue.
Zuckerberg vowed both companies would be run independently, but over the years the services have become increasingly integrated.
Users are now able to link accounts and share content across the platforms. Instagram now has more than one billion users worldwide.
Facebook acquired WhatsApp, an encrypted messaging service, for $19 billion (€15.7 billion).
When Facebook bought WhatsApp, it said it “fosters an environment where independent-minded entrepreneurs can build companies, set their own direction and focus on growth while also benefiting from Facebook’s expertise, resources and scale. This approach is working well with Instagram, and WhatsApp will operate in this manner”.
But in the coming years, the founders of both Instagram and WhatsApp left Facebook amid disagreements with Zuckerberg.
Facebook has started to integrate Instagram and WhatsApp, most recently by linking the apps’ chat functions with its Messenger service.
Such integration could make it more difficult to break off the companies.
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Is McDonalds on the Kylemore road doing home deliveries does anyone know?
@Noel Donohue: only through uber
Whoever coined the phrase Social Media is a genius because in essence it is the complete opposite and should be wiped from the face of the Earth.
@Mark Malone: social media only works because the vast majority of people buy into it. They just provide the platform. Be interesting to see how many people buy into libra once its launched, Zuckerberg will not only control our data , but our money as well. That’s a lot of power invested in one person . But if people chose that …..
Good! Long overdue.
Anti-trust/Monopoly laws should be used more often. There is way too much power held by too few extremely wealthy people.
And very few of them are going to be looking to improve society over increasing their (and their shareholders) bottom line.
He’s worth €800 billion…and there was me thinking it was great when I won €300 on the lottery…how’ll he spend it?
Not sure how they were allowed to but WhatsApp, FB and WhatsApp were the only 2 players in the IM space – Viber and Blackberry messenger did not have significant share.
Facebook has a market value of 800 billion , Zuckerberg himself is not worth that
@John Pog: I know, a mere fraction at 100bn.
Impressive dont you think , I real icon to what a person may achieve.
Facebook and Instagram being linked is very handy, but I’ve never seen the point of Facebook’s investment in WhatsApp considering it already has FB Messenger, and that WhatsApps conversations being encrypted make it almost impossible to monetize in the way other messaging apps can be – buying it always seemed like a mistake to me; would anyone actually notice if WhatsApp was owned by someone else?
The best way the Goverment can ensure that Facebook remain a monopoly is to regulate them. That’s why they are asking to be regulated. They are well aware that increasing the cost of entry into the market through regulation will block any new start up that isn’t already an established multi billion dollar corporation (that can easily hire offices full of compliance officers). The only dynamic sector of the Western economy recently has been technology, precisely because there has been limited regulation. But the politicians are chopping at the bit to bring them under thumb.
have your say