A group of 48 attorneys general and the Federal Trade Commission (FTC) filed a pair of twin lawsuits against Facebook on Wednesday accusing the company of a wide range of antitrust violations.
Facebook is accused of illegally maintaining its monopoly power by using a “buy-or-bury strategy” where competitors are either purchased or destroyed through a variety of tactics. The lawsuits point to Facebook’s acquisition of WhatsApp and Instagram as solidifying the company’s dominance. (RELATED: DOJ Sues Facebook, Alleges Company Discriminated Against US Workers)
By effectively eliminating competition, Facebook is able to exercise “significant control” over what content users see and how personal information is collected, the lawsuit alleges.
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.
— NY AG James (@NewYorkStateAG) December 9, 2020
Both lawsuits point to Facebook’s profitable model of using personal data to sell advertising. The company is able to exploit personal information solely to further its business interests without worrying about the interests of the users, the suit claims. They also allegedly deprive advertisers of the opportunity to purchase advertisements at a lower cost by maintaining their monopoly.
Jennifer Newstead, vice president and general counsel at Facebook, called the lawsuits “revisionist history.”
“Antitrust laws exist to protect consumers and promote innovation, not to punish successful businesses,” Newstead told the Daily Caller in a statement. “Instagram and WhatsApp became the incredible products they are today because Facebook invested billions of dollars, and years of innovation and expertise, to develop new features and better experiences for the millions who enjoy those products.”
“The most important fact in this case, which the Commission does not mention in its 53-page complaint, is that it cleared these acquisitions years ago,” Newstead continued. “The government now wants a do-over, sending a chilling warning to American business that no sale is ever final. People and small businesses don’t choose to use Facebook’s free services and advertising because they have to, they use them because our apps and services deliver the most value. We are going to vigorously defend people’s ability to continue making that choice.”
The lawsuit was filed by 48 attorneys general and represents 47 states and the territory of Guam, which are all led by the state of New York. Both suits were filed in the United States District Court for the District of Columbia. (RELATED: Facebook Faces Class-Action Lawsuit For Collecting Texts, Phone Call Data)
“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,” New York Attorney General Letitia James said in a press release. “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.”
A variety of requests for relief were laid out by state and federal officials in the lawsuits, including divestiture or reconstruction of businesses such as Instagram and WhatsApp as necessary to restore competition. They also request that Facebook have prior notice and approval for mergers and acquisitions and periodically submit compliance reports to the FTC.