Facebook faces two lawsuits at the same time over the past acquisitions of Instagram and WhatsApp.
The US Federal Trade Commission (FTC) and a coalition of attorney general from 48 US states and territories filed two separate lawsuits against Facebook on December 9. The lawsuit targets two major Facebook acquisitions, Instagram and WhatsApp. Both lawsuits sought remedies for alleged anti-competitive behavior, which could lead to Facebook divesting from the two apps.
Faceboook contradicted the lawsuit, arguing that the Commission did not mention it was it who approved the purchases a few years ago.
The lawsuit focuses primarily on Facebook’s history of acquisitions or attempts to acquire the smaller company. Facebook was accused of using market power to crush potential competitors before they could become a real competitor. In addition to acquiring Facebook and Instagram, the FTC’s lawsuit also points to Facebook’s previous attempt to buy several other social networks such as Twitter, WhatsApp.
As such, Facebook’s acquisition strategy hurts competitors and advertisers depend on the platform to reach a large audience because there are few options left.
The FTC accuses Facebook of engaging in a systematic strategy to eliminate the risk of its monopoly position, including two 2012 Instagram acquisitions for $ 1 billion and WhatsApp in 2014 for 19 billion. USD. The lawsuit denounced Facebook as a monopoly on the personal social networking market in the US.
As part of the lawsuit, the FTC wanted a permanent ban, which could lead to Facebook divesting from Instagram and WhatsApp. In addition, the FTC wants to ban Facebook from imposing non-competitive conditions on third-party software developers.
“Since surpassing its original rival Myspace and gaining monopoly power, Facebook has turned to defend through non-competitive measures,” the FTC wrote in the lawsuit. “After identifying two major risks of competing with its monopoly positions – Instagram and WhatsApp, Facebook decided to phase it out by acquiring these companies, reflecting the views of CEO Mark Zuckerberg, as shown in the email. In 2008, it was “buy better than compete”.
The FTC’s lawsuit also reiterated that Facebook tried and failed with Twitter and Snapchat.
Besides, through controlling Instagram and WhatsApp, Facebook has prevented these two applications from “cannibalizing” the main Facebook application. Facebook still forced WhatsApp to only offer personal messaging services instead of becoming a personal social networking service provider, restricting WhatsApp promotion in the US.
Although the states and the FTC joined forces in the investigation, a coalition of states led by New York Attorney General Letitia James decided to file a separate lawsuit. The number of states participating in the lawsuit against Facebook is greater than the lawsuit against Google.
State lawsuits accuse Facebook of holding monopoly power in the US personal social networking market, similar to the FTC’s lawsuit, and illegally maintained by implementing a strategy of “buy or bury” competitors. , affecting both users and advertisers. Facebook’s motives, according to the lawsuit, are partly out of fear that the company will lag behind in key new segments and emerging firms “build networks to compete with Facebook, potentially disrupting dominance. of the company”.
The states insist that Facebook maintains Instagram and WhatsApp as independent brands to “fill the void, so that they will not be replaced by another application that has the potential to erode Facebook’s dominance”.
Facebook states use exclusion tactics along with acquisition strategy to determine the risk of competition in a way that “obstructs competition, prevents investment”. Facebook began acquisitions with the aim of eliminating competition and competition before both Instagram and WhatsApp. In 2009, the company acquired FriendFeed after Product Manager Chris Cox told Zuckerberg that it would be “a bad prospect” if FriendFeed got into Twitter’s hands. The next year, Facebook bought Octazen after an official suggested doing so would strip a competitor’s ability to access a key contact entry service, helping the social network grow.
The lawsuit focuses on the data collection Facebook uses to maintain monopoly. The lawsuit describes the power of Facebook to help the company create its terms for collecting and using information from users. The data Facebook collects allows it to create an experience to retain users, from switching to another service.
Facebook harms users and advertisers, businesses compete through its behavior. For example, advertisers are not given transparent information about the value they receive from advertising nor image damage from malicious content on Facebook services.
The states want to apply for a variety of remedies, including preventing Facebook from making purchases of over $ 10 million without notifying the claiming states.
Du Lam (According to CNBC)
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