New York Attorney General Leticia James led 48 states Wednesday in filing a landmark antitrust lawsuit against Facebook as the Feds, regulators and lawmakers seriously turn up the heat on social media and internet giants.
In an all-out offensive, the Federal Trade Commission filed a separate lawsuit against the company today, alleging it “is illegally maintaining its personal social networking monopoly through a years-long course of anticompetitive conduct.” The suits were coordinated.
At a press conference, James accused Facebook of “using its vast troves of money” to reduce choices, stifle innovation and degrade privacy protections for million of consumers. The lawsuit says the company deliberately acquired smaller rivals like Instagram and WhatsApp to quash competition and that it uses its monopoly position to erode privacy for users. If successful, the lawsuit could result in the first breakup of a U.S. company in decades.
“For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users,” James said. “Today, we are taking action to stand up for the millions of consumers and many small businesses that have been harmed by Facebook’s illegal behavior. Instead of competing on the merits, Facebook used its power to suppress competition so it could take advantage of users and make billions by converting personal data into a cash cow.”
“Almost every state in this nation has joined this bipartisan lawsuit because Facebook’s efforts to dominate the market were as illegal as they were harmful. Today’s suit should send a clear message to Facebook and every other company that any efforts to stifle competition, reduce innovation, or cut privacy protections will be met with the full force of our offices,” she added.
The FTC is seeking a permanent injunction in federal court that could, among other things: require divestitures of assets, including Instagram and WhatsApp; prohibit Facebook from imposing anticompetitive conditions on software developers; and require Facebook to seek prior notice and approval for future mergers and acquisitions.
“Personal social networking is central to the lives of millions of Americans,” said Ian Conner, Director of the FTC’s Bureau of Competition. “Facebook’s actions to entrench and maintain its monopoly deny consumers the benefits of competition. Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive.”
Today’s moves against Facebook follow a late October antitrust suit against Google by the DOJ and 11 state attorneys general for abusing its dominance in search, and a voluminous report released early that month by the House Judiciary Committee’s Antitrust Subcommittee that called Facebook, Google parent Alphabet, Amazon and Apple monopolists.
Facebook acquired Instagram for $1 billion in 2012 and bought WhatsApp two years later in 2014 for $19 billion. Zuckerberg has basically said companies often make acquisitions in the normal course of business and that it offers a free service to users, none of whom are forced to be on the platform.
The antitrust issue has become entangled with issues of consumer privacy, hate speech and free speech with Congress repeatedly summoning CEOs of Facebook, Twitter and Alphabet to grill them about how their giant companies moderate content. The hearings are highly partisan, with Republicans claiming an anti-right wing bias and Dems insisting on more aggressive policing action. President Trump has called for and end to Section 230, a decades old law that shields internet companies from legal liability for content on their platforms. Most recently he insisted a provision abolishing Section 230 be included in a key defense bill or he’d veto it. (The House yesterday approved the bill anyway with a veto-proof majority,)
Last week, the DOJ sued Facebook on a separate issue, claiming it discriminated against qualified and available U.S. workers in favor of temporary visa holders for thousands of well paid jobs.
AG James announced in September of 2019 she was leading a multistate coalition probing Facebook, which has more than 2.7 billion monthly active users and a billion daily users.
The FTC launched a probe of Facebook in July of 2019 investigating the Cambridge Analytica data breach scandal that cost Facebook $5 billion in penalties and forced it to take a close look at its privacy policies. But the advertising model that pays Facebooks bills is based on selling data to marketers.
Rep. David Cicilline (D-RI), who chairs the House Judiciary antitrust subcommittee, said in a statement that “Facebook has broken the law. It must be broken up. I applaud the FTC and state attorneys general who are leading this effort today. This marks a major step in our ongoing work to bring the tech industry’s monopoly moment to an end.” The House Judiciary Committee conducted an investigation of the dominance of major tech platforms and released its findings in October, with Cicilline concluding that there was a “clear and compelling need” for the government to take action.
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