FTC lawsuit seeks to unwind Facebook's purchase of Instagram and WhatsApp

Shawn Knight

Posts: 13,080   +131
Staff member
TL;DR: For Facebook, the terrible, horrible, no good, very bad year will stretch well beyond 2020. As anticipated, the Federal Trade Commission has filed a lawsuit against Facebook that challenges the social media company’s “multi-year course of unlawful conduct” and seeks to unwind its acquisition of Instagram and WhatsApp.

Specifically, the complaint calls out Facebook’s 2012 acquisition of “up-and-coming rival” Instagram and its 2014 purchase of mobile messaging app WhatsApp. The suit also targets what the FTC called “the imposition of anticompetitive conditions on software developers” to curb threats to its “monopoly.”

The moves, the suit alleges, harm competition and leave consumers with few choices for personal social networking. What’s more, it “deprives advertisers of the benefits of competition.”

The FTC is seeing actions that could force Facebook to divest certain assets including Instagram and WhatsApp. The suit also aims to prevent the social media giant from levying anticompetitive conditions on software developers. Furthermore, the FTC and plaintiffs would like Facebook to get prior approval for future acquisitions.

“Personal social networking is central to the lives of millions of Americans,” said Ian Conner, director of the FTC’s bureau of competition. “Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive,” he added.

The FTC collaborated with attorneys general of 46 states, the District of Columbia and Guam during its investigation.

Facebook on Thursday said that both of its acquisitions (Instagram and WhatsApp) were reviewed by relevant antitrust regulators at the time. As Facebook recounts, the FTC conducted an in-depth Second Request of the Instagram transaction before voting unanimously to clear it while the European Commission reviewed the WhatsApp deal in 2014 and said there was no risk of harm to competition.

“Now, many years later, with seemingly no regard for settled law or the consequences to innovation and investment, the agency is saying it got it wrong and wants a do-over. In addition to being revisionist history, this is simply not how the antitrust laws are supposed to work.”

Facebook added that it is aware of the atmosphere in which the FTC is bringing the case. “Important questions are being asked about “big tech” and whether Facebook and its competitors are making the right decisions around things like elections, harmful content and privacy.”

Facebook said it has taken many steps to address these issues, adding that they are far from done. “But none of these issues are antitrust concerns, and the FTC’s case would do nothing to address them.”

Image credit: Cryptographer, tanuha2001

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mbrowne5061

Posts: 1,808   +1,040
I think the FTC wrongly assumed back during these acquisitions that there would be other, new social media platforms that would continue to crop up. They didn't realize that the industry had entered its consolidation phase, and that there was unlikely any new break-away social networks would created (especially not once the consolidation was complete, and monopolies were established)
 

Nobonita Barua

Posts: 61   +63
I am little confused about how does this thing work. According to them Facebook, whats-app, Instagram all are private entities which has "nothing to do" anything with government/ state.
Now it requires approval from those it has nothing to do with?
 

QuantumPhysics

Posts: 4,736   +5,147
As much as I hate Facebook and Zuckerberg, THE GOVERNMENT has no constitutional right whatsoever to be doing any of this.

Unfortunately the right wing and left wing are nothing but Big Government types who want Bigger government.
 

brucek

Posts: 769   +1,063
TechSpot Elite
I have nothing nice to say about Facebook, but I'd be hard pressed to name a specific way they've used monopoly power to charge me unfair prices (I've never paid them a cent) or otherwise impede my life (I feel like I have dozens of ways to interact with others on the Internet, most of which I like better anyway.)

If we'd get around as a society to coming up with a reasonable set of data privacy rights, they're probably in violation of those, but the first step has to be coming a shared understanding and legal framework for what they should be and how they should be enforced. We'll get there eventually but it's all still too new and still moving too quickly.
 

lipe123

Posts: 972   +560
This doesn't seem right.
The FTC ok'ed it and now want takebacksies?
That's not how laws and rules are supposed to work.

Also what is tiktok if not brand new competition?
 

Tom Yum

Posts: 88   +209
I have nothing nice to say about Facebook, but I'd be hard pressed to name a specific way they've used monopoly power to charge me unfair prices (I've never paid them a cent) or otherwise impede my life (I feel like I have dozens of ways to interact with others on the Internet, most of which I like better anyway.)

If we'd get around as a society to coming up with a reasonable set of data privacy rights, they're probably in violation of those, but the first step has to be coming a shared understanding and legal framework for what they should be and how they should be enforced. We'll get there eventually but it's all still too new and still moving too quickly.

That is because you are not the customer, you are the product. The customer is companies wishing to advertise on FB platforms using FB provided user data, and they pay billions to access that. I do agree though that establishing much stronger and clearer data privacy laws will be a better first step than breaking up existing monopolies.
 

brucek

Posts: 769   +1,063
TechSpot Elite
The customer is companies wishing to advertise on FB platforms using FB provided user data, and they pay billions to access that.
Is that really who this action is on behalf of? Couple things, 1) I don't have to think any farther than "Google" to have trouble believing FB is actually a monopoly in even internet advertising, let alone advertising in general; and 2) while it's not inconceivable to bring antitrust actions on behalf of companies vs. citizens, I do think it is a lot less common and usually less politically feasible. Are there really a lot of voters concerned that GM may be having to pay facebook too much to advertise on it?

I'm tempted to think that is more a flimsy excuse than the actual reason this action was taken. Maybe they just pissed off too many powerful people.
 

franticfrosty

Posts: 102   +117
Seems to me the government are unhappy with the fact they cant make more money off facebook so why not just "unwind" for a 30% tax on this "unwind", I'm a little puzzled why they're wasting time on things that don't concern them.

Even more so when they could actually do work on things that actually matter..
 

mbrowne5061

Posts: 1,808   +1,040
As much as I hate Facebook and Zuckerberg, THE GOVERNMENT has no constitutional right whatsoever to be doing any of this.

Unfortunately the right wing and left wing are nothing but Big Government types who want Bigger government.
Man, companies ain't your friend any more than the government is. At least with a democratic government, you can change those in charge fairly easily.
 

mbrowne5061

Posts: 1,808   +1,040
This doesn't seem right.
The FTC ok'ed it and now want takebacksies?
That's not how laws and rules are supposed to work.
They weren't a monopoly, and now they are one - and they are one that is abusing their position. The govt. OK'd the expansion of Standard Oil back in the day, right up until they became a monopoly that was abusing its position to control the market and shut out competition. There is precedent for the US government allowing monopolies, so long as they do not abuse their power to either remain that way (in case new competition emerges) or to gouge the consumer on price.

Facebook is gouging their ad-buyers on prices, and they are stifling competing products by either buying them or cloning them (where do you think Instagram stories came from? Snapchat clone)

Also what is tiktok if not brand new competition?
Tik Tok is miniscule in comparison to Facebook's size and advertising reach. It also does not really offer anything unique - Facebook, the company, could put out a Tik Tok clone tomorrow, and probably get Tik Tok's demographic to use it as long as they didn't force them to use Facebook, the site, as well (and called it something else).