Facebook accused of buying and burying rivals by US FTC in renewed antitrust fight

The US Federal Trade Commission (FTC) updated its antitrust case against Facebook Inc on Thursday, adding more details about the charge that the social media company crushed or bought rivals and once again asked a judge to enforce the social media giant selling Instagram and WhatsApp.

At 80 pages, the new complaint is significantly longer than the original and includes additional data intended to support the FTC’s claim that Facebook is a monopolist. An expanded portion of the complaint argues that Facebook dominates the US personal social networking market, with more than 65% of monthly active users since 2012.

The FTC voted 3-2 along party lines to open the amended lawsuit and denied Facebook’s request that agency chief Lina Khan be turned down. Khan participated in the filing of the new claim.

The agency also repeated its request that a court order Facebook to sell Instagram, which it bought in 2012 for $1 billion (about Rs. 7,445 crores), and WhatsApp, which it bought in 2014 for $19 billion (about Rs. 7,445 crores). of Rs. 1.41.467 crores))

The FTC accused Facebook of an “illegal purchase or burial scheme to crush competition” in the headline of the press release about its complaint.

Facebook said it will continue to fight the lawsuit.

“It is regrettable that despite the court’s rejection of the complaint and the conclusion that there was no basis for a claim, the FTC chose to continue this process without merit,” a company spokesperson said. “Our Instagram and WhatsApp acquisitions were reviewed and released many years ago, and our platform policies were cool.”

Different from Twitter

The FTC’s high-profile case against Facebook represents one of the most significant challenges the agency has brought against a tech company in decades and is being watched closely as Washington seeks to confront Big Tech’s broad market power.

“Despite causing significant customer dissatisfaction, Facebook has made huge profits over a long period of time, suggesting that it has monopoly power and that its rivals in personal social media are not able to overcome barriers to entry and challenge its dominance.” said the corrected complaint.

In an effort to show Facebook’s dominance of personal social media, the FTC’s complaint differentiated it from the short video app TikTok and from sites like Twitter, Reddit and Pinterest, which claim they’re not focused on connecting friends and family.

The amended complaint came after US District Court Judge James Boasberg for the District of Columbia said in June that the FTC’s original complaint filed in December provided no evidence that Facebook had monopoly power in the social networking market.

Starting in 2007, Facebook invited apps to its platform to make it more attractive, but realized that some could turn into competitors and slammed the door in 2013 for any app that could become a rival, but it reverted in 2018 under pressure in Europe, the complaint said.

“Having suspended its anti-competitive platform policies in response to early public scrutiny, Facebook will likely reinstate those policies if such scrutiny passes,” the complaint said.

Facebook shares rose 0.2 percent to $356.09 (about Rs. 26,500) in afternoon trading.

‘A better complaint’

John Newman, who teaches at the University of Miami School of Law, said the complaint clearly responds to Judge Boasberg’s concerns about the first draft. “There are no new huge bombs here.”

A second antitrust expert said he believes the court will have difficulty ordering Instagram or WhatsApp to sell because they were bought years ago.

“It’s a better complaint because it says much more specifically that Facebook has dominance on social media,” added Seth Bloom of Bloom’s Strategic Council.

US Senator Amy Klobuchar, chair of the Senate Judiciary Committee’s antitrust panel, said she was pleased to see the FTC hold Facebook accountable for a “long history of anti-competitive behavior.”

Alex Harman of consumer rights group Public Citizen said, referring to new FTC President Khan, that the recasting of the case “should be a message to Facebook and other monopolists that there is a new sheriff in town and the party is over . “

© Thomson Reuters 2021


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