Facebook slapped with twin lawsuits in US
Facebook Inc could be forced to sell its prized assets WhatsApp and Instagram after the US Federal Trade Commission and nearly every US state filed lawsuits against the social media company, saying it used a “buy or bury” strategy to snap up rivals and keep smaller competitors at bay.
With the filing of the twin lawsuits on Wednesday, Facebook becomes the second big tech company to face a major legal challenge this year after the US Justice Department sued Alphabet Inc’s Google in October, accusing the US$1 trillion company of using its market power to fend off rivals.
The complaints on Wednesday accuse Facebook of buying up rivals, focusing specifically on its previous acquisitions of photo-sharing app Instagram for US$1 billion in 2012 and messaging app WhatsApp for US$19 billion in 2014.
Federal and state regulators said the acquisitions should be unwound — a move that is likely to set off a long legal challenge as the deals were cleared years earlier by the FTC.
“For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals, snuff out competition, all at the expense of everyday users,” said New York Attorney General Letitia James on behalf of the coalition of 46 states, Washington DC and Guam.
Alabama, Georgia, South Carolina and South Dakota did not participate in the lawsuit. James said the company acquired rivals before they could threaten the company’s dominance.
Facebook’s general counsel Jennifer Newstead called the lawsuits “revisionist history” and said antitrust laws do not exist to punish “successful companies.” She said WhatsApp and Instagram have succeeded after Facebook invested billions of dollars in growing the apps. “The government now wants a do-over, sending a chilling warning to American business that no sale is ever final,” Newstead said.
Some antitrust experts said the case was unusually strong given damning statements by Chief Executive Mark Zuckerberg plucked from Facebook’s own documents, like a 2008 e-mail in which he said “it is better to buy than compete.”
Other experts such as Seth Bloom of Bloom Strategic Counsel said the FTC complaint was “significantly weaker” than the DOJ’s lawsuit against Google.