FTC Sues Facebook for Illegal Monopolization

The Federal Trade Commission todayย sued Facebook, alleging that the company is illegally maintaining its personal social networking monopoly through a years-long course of anticompetitive conduct. Following a lengthy investigation in cooperation with a coalition of attorneys general of 46 states, the District of Columbia, and Guam, the complaint alleges that Facebook has engaged in a systematic strategyโ€”including its 2012 acquisition of up-and-coming rival Instagram, its 2014 acquisition of the mobile messaging app WhatsApp, and the imposition of anticompetitive conditions on software developersโ€”to eliminate threats to its monopoly. This course of conduct harms competition, leaves consumers with few choices for personal social networking, and deprives advertisers of the benefits of competition.

The FTC is seeking a permanent injunction in federal courtthat 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.

โ€œPersonal social networking is central to the lives of millions of Americans,โ€ said Ian Conner, Director of the FTCโ€™s Bureau of Competition. โ€œFacebookโ€™s actions to entrench and maintain its monopoly deny consumers the benefits of competition. Our aim is to roll back Facebookโ€™s anticompetitive conduct and restore competition so that innovation and free competition can thrive.โ€

Video by Ian Conner, Director of the Bureau of Competition

Statement by Ian Conner, Director of the Bureau of Competition

According to the FTCโ€™s complaint, Facebook is the worldโ€™s dominant personal social networking service and has monopoly power in a market for personal social networking services.  This unmatched position has provided Facebook with staggering profits. Last year alone, Facebook generated revenues of more than $70 billion and profits of more than $18.5 billion.

Anticompetitive Acquisitions

According to the FTCโ€™s complaint, Facebook targeted potential competitive threats to its dominance. Instagram, a rapidly growing startup, emerged at a critical time in personal social networking competition, when users of personal social networking services were migrating from desktop computers to smartphones, and when consumers were increasingly embracing photo-sharing. The complaint alleges that Facebook executives, including CEO Mark Zuckerberg, quickly recognized that Instagram was a vibrant and innovative personal social network and an existential threat to Facebookโ€™s monopoly power.

The complaint alleges that Facebook initially tried to compete with Instagram on the merits by improving its own offerings, but Facebook ultimately chose to buy Instagram rather than compete with it. Facebookโ€™s acquisition of Instagram for $1 billion in April 2012 allegedly both neutralizes the direct threat posed by Instagram and makes it more difficult for another personal social networking competitor to gain scale.

Around the same time, according to the complaint, Facebook perceived that โ€œover-the-topโ€ mobile messaging apps also presented a serious threat to Facebookโ€™s monopoly power. In particular, the complaint alleges that Facebookโ€™s leadership understoodโ€”and fearedโ€”that a successful mobile messaging app could enterthe personal social networking market, either by adding new features or by spinning off a standalone personal social networking app.

The complaint alleges that, by 2012, WhatsApp had emerged as the clear global โ€œcategory leaderโ€ in mobile messaging. Again, according to the complaint, Facebook chose to buy an emerging threat rather than compete, and announced an agreement in February 2014 to acquire WhatsApp for $19 billion. Facebookโ€™s acquisition of WhatsApp allegedly both neutralizes the prospect that WhatsApp itself might threaten Facebookโ€™s personal social networking monopoly and ensures that any future threat will have a more difficult time gaining scale in mobile messaging.

Anticompetitive Platform Conduct

The complaint also alleges that Facebook, over many years, has imposed anticompetitive conditions on third-party software developersโ€™ access to valuable interconnections to its platform, such as the application programming interfaces (โ€œAPIsโ€) that allow the developersโ€™ apps to interface with Facebook. In particular, Facebook allegedly has made key APIs available to third-party applications only on the condition that they refrain from developing competing functionalities, and from connecting with or promoting other social networking services.

The complaint alleges that Facebook has enforced these policies by cutting off API access to blunt perceived competitive threats from rival personal social networking services, mobile messaging apps, and other apps with social functionalities. For example, in 2013, Twitter launched the app Vine, which allowed users to shoot and share short video segments. In response, according to the complaint, Facebook shut down the API that would have allowed Vine to access friends via Facebook.

The lawsuit follows an investigation by the FTCโ€™s Technology Enforcement Division, whose staff cooperated closely with a coalition of attorneys general, under the coordination of the New York State Office of the Attorney General. Participating Attorneys General include: Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Guam, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.

The Commission vote to authorize staff to file for a permanent injunction and other equitable relief in the U.S. District Court for the District of Columbia was 3-2. Commissioners Noah Joshua Phillips and Christine S. Wilson voted no.

NOTE: The Commission issues a complaint when it has โ€œreason to believeโ€ that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest.

The Federal Trade Commission works to promote competition, and protect and educate consumers.  You can learn more about how competition benefits consumers or file an antitrust complaint.

1910134fbcomplaint

The Thinking Conservative
The Thinking Conservativehttps://www.thethinkingconservative.com/
The goal of THE THINKING CONSERVATIVE is to help us educate ourselves on conservative topics of importance to our freedom and our pursuit of happiness. We do this by sharing conservative opinions on all kinds of subjects, from all types of people, and all kinds of media, in a way that will challenge our perceptions and help us to make educated choices.

Columns

Why Fishermen Are Catching Fewer Lobsters in Maine

For veteran lobsterman Travis Dammier, it was the end of another trip at sea on a solo voyage to earn a living.

Viewers like you

There is no constitutional authority for any spending on public broadcasting โ€“ period. Any questions: See Article 1, Section 8 of the U.S. Constitution.

Beyond the Trump-Musk fallout?

We are witnessing an unprecedented, unhinged Democrat effort to use lawfare, big Democrat donors, street theater, congressional disruptions, potty-mouth videos, the administrative state, the legacy media, and discredited pollsters to stop the Trump agenda.

Trans-wormal

No worm ever said "I am anthropomorphizing, I am a butterfly" to a toad or flock of geese and expected acknowledgement and support.

In Greenlandโ€™s Icy Capital, Past Troubles Haunt Hopes for the Future

As geopolitical realities and ongoing economic growth raise the stakes, U.S. interest in Greenland and the dream of independence may change things in a big way.

News

Why Drug Price Reform Alone Wonโ€™t Heal America

What happens when medications become too cheap, plentiful, and automatic and we donโ€™t reform how drugs are used? We risk clinical harm.

Trump Says Musk Will Face โ€˜Very Serious Consequencesโ€™ If He Backs Democrats

President Trump warned that Musk could face โ€œserious consequencesโ€ if he decides to back Democratic political candidates in upcoming elections.

Judge Declines to Block Trump Admin From Dismantling Library Services Agency

A federal judge cleared the way for the Trump admin to move forward with plan to dismantle the federal agency that funds libraries nationwide.

Supreme Court to Review Alabamaโ€™s Death Row Case Concerning IQ Test

The Supreme Court will consider how courts should weigh multiple IQ tests when assessing a death row defendantโ€™s claim of intellectual disability.

US Travel Ban Will Not Hinder Los Angeles Olympics, LA28 CEO Says

Trumpโ€™s directive banning citizens from 12 countries from entering US exempts athletes. Officials confident Games have full backing of administration.

Musk Mulls New Political Party Amid Feud With Trump

Elon Musk is considering launching a new political party in wake of his public fallout with President Trump over a major Republican tax and spending bill.

Citigroup Reverses Course on Controversial Firearm Policies

Citigroup reversed its policy requiring retail business clients to refrain from selling firearms to those who havenโ€™t passed background checks.

AI Is Taking Thousands of Jobs; Is Yours at Risk?

Just as the internet radically changed how America conducts business, AI is also making waves in the workplace by taking thousands of jobs.
spot_img

Related Articles