WASHINGTON: After the US Federal Trade Commission and almost every US state filed lawsuits against the social media firm on Wednesday, Facebook Inc could be pressured to sell its precious properties, WhatsApp and Instagram, alleging it used a “buy or bury” tactic to pick up rivals and hold smaller competitors at bay.
After the US Justice Department sued Google’s Alphabet Inc in October, accusing the $1 trillion company of leveraging its market strength to ward off competitors, Facebook became the second large tech company to face a significant legal battle this year with the filing of the twin litigation.
The lawsuits highlight the growing bipartisan consensus to hold Big Tech accountable for its business practices and mark a rare moment of agreement between the Trump administration and Democrats, some of whom have advocated breaking up both Google and Facebook.
Wednesday’s allegations accuse Facebook of snapping up competitors, reflecting primarily on its recent purchases of Instagram photo-sharing app for $1 billion in 2012 and WhatsApp chat app for $19bn in 2014.
The purchases should be unwound, Federal and state regulators said a decision that is sure to set off a lengthy legal challenge since the transactions were approved by the FTC years ago.
“Facebook has used its dominance and monopoly power for almost a decade to crush smaller rivals, snuff out competition, all at the expense of everyday users,” New York Attorney General Letitia James said on behalf of the 46-state, Washington DC and Guam alliance.
Not involved in the case is Alabama, Georgia, South Carolina and South Dakota.
James said that before they could challenge its supremacy, the organisation absorbed rivals.
Jennifer Newstead, lawyer for Facebook, called the cases “revisionist history” and said that antitrust regulations do not exist to prosecute “successful businesses.” After Facebook spent billions of dollars in expanding the software, she said WhatsApp and Instagram have succeeded.
Newstead added, “The government now wants a do-over, sending American business a chilling warning that no sale is ever final.”
She also raised concerns about Facebook’s alleged harm, arguing that users benefited from their decision to make WhatsApp free, and without access to its developer portal, rivals such as YouTube, Twitter and WeChat did’ just fine.’
Zuckerberg not worried
Chief Executive Mark Zuckerberg told staff in a post on Facebook’s internal discussion site that he did not expect “any impact on individual teams or roles” as a consequence of the litigation, which he said were one step in a process that could take years to complete.”
For Zuckerberg’s post, as well as for other reports on the lawsuits posted by Newstead and Michel Protti, Chief Privacy Officer for Product, comments were shut off. Newstead has warned workers not to tweet about the events.
Facebook did not respond to inquiries about the articles immediately.
According to an audio of internal company meetings released by The Verge, Zuckerberg promised workers in July that Facebook would go to the mat’ to battle a legal challenge to break up the company, calling it a ‘existential threat.