We’ve been hearing murmurs about a massive lawsuit that was being prepared against Facebook by the U.S. federal government. That day has finally arrived as the New York Attorney General Letitia James and the Federal Trade Commission have filed separate but massive antitrust lawsuits at the same time. The crux of the lawsuit is that the social media giant is accused of using its power and influence to crush the competition by acquiring competing services that they see as a threat.
In a press conference, James said that Facebook has spent a lot of money in the acquisition of “potential rivals”, therefore crushing them even before they become a threat. Aside from its acquisition strategy, Facebook is accused of using its power and reach to stop the user growth of competing services. There are forty seven other state and regional attorneys general that will be joining her in the lawsuit.
Meanwhile, the FTC’s separate lawsuit also tackles similar issues but is even more specific as it is calling for the reversal or unwinding of the company’s acquisition of Instagram and WhatsApp. If the court agrees, then the two companies will be spun off into independent entities. The FTC also cites Facebook’s practice of cutting off API access for services that are perceived threats, citing the blocking of former video sharing service Vine’s friend-finding feature.
Meanwhile, Facebook says that the acquisition of Instagram and WhatsApp have been previously cleared by government regulatory agencies and that these lawsuits are “revisionist history”. They also cited the fact that the agency says that “no sale will ever be final” as a dangerous precedent and will have a “chilling effect on innovation” not to mention eventual harm to consumers. They are looking forward to presenting evidence in court that Facebook, Instagram, and WhatsApp “belong together”.
While Facebook acknowledged that the important questions are being asked of “big tech” when it comes to companies like them, Google, Apple, etc making the right decisions, they say that these are not antitrust matters and they will be best solved by “updating the rules of the Internet”. It would be interesting to see how the courts will respond to the lawsuits and whether or not these will have a chilling effect not just on Facebook but on other tech giants as well.
