FTC accuses Facebook of antitrust infringements: U.S. regulators launch offensive
Regulators around the world are becoming increasingly hostile to the social media giant
The US Federal Trade Commission has filed a lawsuit against Facebook alleging that the company has been engaging in anti-competitive practices since it acquired its dominant global position in 2010.
According to the proceedings released Wednesday, the authority believes that Facebook has systematically purchased or reproduced the functionality of any other competing social media that may have posed a threat to the company’s dominance. The lawsuit cites the Financial Peak acquisition of Instagram in 2012 and the acquisition of WhatsApp in 2014 as the most striking examples of such anti-competitive practices.
Based on internal and public communications obtained from the entity, Facebook executives recognized Instagram as a potential threat even before the acquisition. Given the gradual spread of smartphones and Instagram’s focus on photo sharing, the platform was likely to capture a significant market share.
In July, during a hearing before the antitrust committee, Mark Zuckerberg replied that at the time it was not yet clear that Instagram would dominate this sector. Despite this, the files show that Facebook’s attempts to enhance its product’s photo-sharing capabilities were not yielding the desired results, citing internal notes. After the acquisition by Facebook, Instagram took away part of the market share of the company’s main product, while the younger generations left the platform.
WhatsApp, according to the lawsuit, was purchased to prevent the app from creating its own social media platform that would challenge Facebook’s platform
Given its strong position as one of the world’s leading messaging platforms, attempts to introduce social media capabilities would have been easier than a company starting from scratch.
In addition, regulators pointed out that Facebook sought to acquire other competitors such as Twitter and Snapchat, as well as a number of other seemingly anti-competitive practices such as heavy restrictions on APIs and the purchase of Onavo, a data company that could offer in-depth information about potential competitors.
The lawsuit aims to force the demerger of Instagram, WhatsApp and potentially other divisions, making them once again independent companies. It also seeks punitive damages, prohibitions on similar conduct in the future, and periodic inspections by the FTC.
Since 2019, Facebook has been strongly criticised by regulators for introducing Libra, a global crypto-currency payments system now known as Diem.
The initial plan was to integrate Diem with other Facebook products, including WhatsApp, thereby exposing billions of users to the company’s cryptocurrency. In 2020, the giant also experimented with non-crypto payments on WhatsApp.
Although these plans were eventually abandoned, when the project was radically redesigned to meet regulators‘ demands, a potential removal of Instagram and WhatsApp would leave Facebook severely weakened in terms of scope and product integrations. Facebook Financial, the division responsible for Diem and other fintech projects, could be another target for direct removal, given its relative self-sufficiency.