Antitrust lawsuits by FTC attorneys general on Facebook

The FTC voted a federal court in Washington after more than a year of investigation with 3 to 2 votes. Commission staff had been preparing the lawsuit for months and suggested that the FTC vote to initiate the case.

“Personal social networking is central to the lives of millions of Americans,” said Ian Conner, director of the FTC’s Competition Bureau. “Measures to preserve and maintain Facebook’s monopoly deny consumers the benefits of competition. Our goal is to curb Facebook’s anti-competitive behavior and restore competition so that innovation and free competition can flourish. “

Letitia James, a Democratic Attorney General of New York, has announced a lawsuit involving the District of Columbia and Guam. It was also filed in Washington DC

“For nearly a decade, Facebook has been using its dominance and monopoly power to crush smaller rivals and stifle competition, all to the detriment of everyday users,” Ms. James said at a news conference on Wednesday. “Instead of competing on the merits, Facebook used its power to suppress competition to leverage users and raise billions by converting personal information into cash cows.”

Facebook said the lawsuits were in line with a regulatory revision, noting that the FTC had previously approved its Instagram and WhatsApp transactions.

“The government now wants a transfer and sends a cold warning to U.S. businesses that no sale will be final,” said Jennifer Newstead, Facebook’s vice president and general counsel. “People and small businesses choose not because they use Facebook’s free services and ads because they have to, but because our apps and services provide the most value. We will definitely defend the ability of people to continue to make that decision. “

Federal state coordination indicates the intensity of the legal pressure Facebook faces, as well as the fact that state law enforcement officials are taking the lead in antitrust battles with the country’s strongest tech companies. Some states have also joined the Department of Justice over Google’s lawsuit, and two other state coalitions are considering further cases against the search giant, the Alphabet unit. Inc.

For Facebook, Wednesday’s submissions show a confrontation with the government, which founder and CEO Mark Zuckerberg has called “existential” in the past. Mr Zuckerberg, who personally planned a number of actions targeted by the lawsuits, had previously vowed to offset the government’s antitrust complaints in court, while expressing confidence that Facebook would prevail.

The FTC allowed the technology giant to acquire Instagram and WhatsApp in 2012 and 2014, respectively. Over the past decade, some of the dozens of companies acquired by Facebook have required government licenses, while other smaller stores have not.

The cases present Facebook with one of the biggest challenges in its 16-year development from college startup to social media giant. The Facebook app alone has 196 million active users in the U.S. and Canada, and more than 2.5 billion people worldwide use its products daily.

In the early stages of Facebook, public attention focused on the platform’s ability to grow and make money while beating cultural touchpoints and viral trends. But in recent years, the focus has shifted to the power of Facebook: its extensive data collection and ability to shape users ’emotional states, accelerating the spread of hateful conspiracy theories, and potentially influencing democratic processes, including elections. The company’s business direction has also been investigated for its ability to throw certain applications into black, reduce discount deals and use its financial strength to acquire promising startups.

According to Facebook, its critics have no valid basis to claim that the acquired companies would have appeared because the main competitors would have remained independent. Platforms like Instagram have been a huge success precisely because Facebook bought them and invested significant sums in their development, Mr Zuckerberg said.

Facebook has been building its legal arguments against a likely FTC lawsuit for months, and plans to argue that the committee’s efforts over previous acquisitions would run counter to established laws, harm consumers and cost billions of dollars if the government sought to break up.

The lawsuit comes two months after the U.S. House Antitrust Subcommittee published a report on Big Tech’s dominance, which concluded that Facebook maintained a monopoly on competition threats because all potential rivals faced major hurdles and tried to challenge the technology giant with its competitors. The panel found that Facebook maintained and expanded its dominance by acquiring the threatening companies and selectively excluded other services on the platform from construction services.

Mr Zuckerberg said in a House statement in July that Facebook continues to face fierce competition.

Facebook reached a record $ 5 billion deal with the FTC last year to resolve an antitrust investigation that violates consumer privacy. The committee said in this case that Facebook has misled users about their ability to control access to their private information. Facebook said it has made great strides in privacy and that the township is part of restoring public trust.

Some lawmakers, antitrust experts, and consumer advocates have criticized the FTC for failing to address the growing dominance of large technology companies. The Facebook period shows a departure from the committee’s reputation as it has taken risks in its implementing measures. Famously, in early 2013, it decided not to initiate antitrust proceedings against Google after spending more than a year investigating the company. The search giant has made a number of voluntary changes to its practice, but has escaped without mandatory legal requirements.

The FTC shares antitrust enforcement authorities with the Department of Justice, but the five-member bipartisan committee has a different structure for bringing cases in which a majority vote is required to file a lawsuit. FTC President Joseph Simons, a Republican appointed by President Trump, united this majority during the political shift over the victory of President-elect Joe Biden, who will have the opportunity to form a committee once he takes office. Mr Simons was joined by Democratic Commissioners Rohit Chopra and Rebecca Slaughter. Republican commissioners Noah Joshua Phillips and Christine S. Wilson voted no.

Resolving lawsuits against Facebook will probably take years. The commission and the states may not impose changes on the company’s business; they must first prove on Facebook that they have violated the federal antitrust law, and such changes are needed.

Facebook has already switched to integrating the various services it has acquired, and will likely emphasize that the committee has blessed some of its acquisitions in the past.

Some commissioners have previously voiced concerns about Facebook. During the 2012 review of the Instagram agreement, some at the FTC were concerned about the competition implications of the transaction, but were unsure if they could win a case, The Wall Street Journal reported.

Facebook is also under increased antitrust control in Europe. The European Commission, the European Union’s highest antitrust body, has carried out a preliminary investigation into the verification and use of the company’s user data, including for advertising purposes. The trial may become a formal investigation or eventually be discarded.

“It’s a huge investigation, a lot of data coming in,” Margrethe Vestager, executive vice president of the European Commission, said at a news conference last week, adding that “it’s very early days.”

Facebook has stated that it is committed to working with the probe.

– Jeff Horwitz and Sam Schechner contributed to this article.

Write to him Brent Kendall at bre[email protected] and John D. McKinnon at [email protected]