Facebook Under Fire as FTC Weighs Antitrust Lawsuit
The FTC first started investigating a potential antitrust lawsuit against Facebook in mid-2019
State and federal regulators are moving closer to filing an antitrust lawsuit against Facebook, The Washington Post and The New York Times reported on Thursday. The antitrust case would largely focus on Facebook’s acquisitions of Instagram and WhatsApp in 2012 and 2014, respectively, and whether those moves helped Facebook build a social media monopoly.
The reports come about a week after Alex Kantrowitz, author of the Big Technology newsletter, reported the Federal Trade Commission was crafting an antitrust case against Facebook.
Facebook did not immediately respond to TheWrap’s request for comment.
The FTC first started investigating a potential antitrust lawsuit against Facebook in mid-2019, the Times reported. Thousands of internal documents have been reviewed and interviews with other social media companies, including Snapchat, have taken place, as government officials look into Facebook’s social media dominance, the same report added.
Facebook bought Instagram for $1 billion in 2012; two years later, it acquired popular messaging service WhatsApp for $19 billion. Both deals were approved by the FTC. The company and CEO Mark Zuckerberg have faced increased scrutiny from Washington, D.C. in recent years, though, along with other Silicon Valley tech giants. (The U.S. Justice Department filed an antitrust against “monopolist” Google last month, claiming the search giant has used “anticompetitive tactics” to maintain its dominance in search and advertising.)
Last year, Facebook reached a record-setting $5 billion settlement with the FTC after it was investigated for several data privacy issues. Now, federal regulators are looking to see if Facebook built its digital empire — now valued at $775 billion — by using anti-competitive practices. As the Times mentioned, a House Judiciary Committee recently noted Facebook “has tipped the market toward monopoly such that Facebook competes more vigorously among its own products — Facebook, Instagram, WhatsApp and Messenger — than with actual competitors.”
The government will have a high bar to clear in any case that it brings. Penn State antitrust professor John Lopatka told TheWrap previously there are “two necessary ingredients” that would be needed to take action against a company like Facebook: Not only does there have to be proof Facebook is a monopoly, but you’d also have to show Facebook extended its monopoly “through anti-competitive conduct.”
“We can assume Facebook has monopoly power in the social media platform market, but that’s not enough,” Lopatka said. “You still have to prove it acquired or maintains that power through anti-competitive power, and I don’t know any reason to believe that’s the case.”
Check TheWrap later on Thursday for an in-depth look at the government’s potential case against Facebook — and what the company may argue in its defense.
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