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Facebook slapped with massive antitrust lawsuits to break up social media chokehold
For years, Facebook has been fighting threats of lawsuits, legal challenges and investigations into its practices. It all came to a head this week.
Those legal issues aren’t the only problems Facebook has faced recently, though; Facebook-owned Instagram was accused of illegal facial recognition scans of millions of users earlier this year.
And now, we’re seeing history unfold. The Federal Trade Commission, along with 48 states and districts, filed two separate lawsuits against the social media giant. Here’s what we know so far.
The new lawsuits against Facebook
The lawsuits are pretty clear. They claim that Facebook harms consumers, advertisers and competing firms and that it engaged in a systematic strategy to eliminate all competitors with the mentality, “if you can’t beat ’em, buy ’em.”
The suits say Facebook, with its 2.7 billion users and $800 billion market value, puts a damper on consumer choices and harms users with data privacy issues.
Facebook purchased smaller companies that could’ve posed a threat to create a monopoly, the suits say. Any perceived competition and threats were targeted and then crushed or silenced.
It often worked. Facebook bought Instagram and WhatsApp, and the combined customer base of Facebook, Instagram and WhatsApp is now 5.75 billion users. That’s about one-third of the world’s population.
Facebook also tried and failed to buy Twitter and Snapchat along the way.
Facebook is accused of other types of anticompetitive behavior, too, like copying features introduced by its competitors. It also had a practice of opening its site to third-party app developers, then abruptly cutting off access when deemed a threat, according to the lawsuits.
Not only did this behavior cut down on users’ options for other social media platforms, but it also limited social media alternatives that would be more user-friendly in their data-gathering practices. Without the competition from other platforms, Facebook was free to harvest consumer data, according to the lawsuits.
By building a social media conglomerate, Facebook allegedly was also able to limit platform choices for advertisers, too, which maximized the price it could charge for ads on its platform. This helped it reap a fortune in advertising revenue.
What does Facebook have to say?
Facebook calls the lawsuits revisionist history, saying that years after the FTC cleared those acquisitions, the government now wants a do-over.
“Facebook as we know it today would not have been possible without U.S. laws that encourage competition and innovation. We’ve been successful because we’ve made risky bets, invested, innovated and delivered value to people, advertisers and shareholders,” writes Jennifer Newstead, Facebook Vice President and General Counsel.
“We have operated and continue to operate in a highly competitive space. Our acquisitions have been good for competition, good for advertisers and good for people. We look forward to our day in court, when we’re confident the evidence will show that Facebook, Instagram and WhatsApp belong together, competing on the merits with great products.”
What these lawsuits could mean for social media users
While it may come as no surprise that Facebook is facing legal action, these lawsuits truly are history in the making. The accusations are incredibly serious, and the case will be as big as some of the other antitrust lawsuits in recent history, including what we saw with AT&T, Kodak and Standard Oil.
If the lawsuits are successful, it could force Facebook to split off some of its other social media and messaging platforms, primarily Instagram and WhatsApp. These are just two of the 70-plus companies Facebook has acquired over the last 15 years, though. If the social media giant is forced to restructure, it could affect any or all of the companies under the Facebook umbrella.
Tags: Competition, Facebook, Federal Trade Commission, Instagram, lawsuits, monopoly
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