The amended lawsuit, which focused on Facebook’s acquisition of WhatsApp and Instagram, comes after a judge rejected two antitrust cases against the company in June.
The United States Federal Trade Commission issued one on August 19th modified complaint against Facebook in the agency’s ongoing federal antitrust proceedings against the company. The complaint alleges that Facebook used a “buy-or-bury” scheme to maintain dominance of its services. It illegally acquired innovative competitors with popular mobile features that succeeded where Facebook’s own offerings “fell apart or fell apart,” the FTC said. Facebook lured app developers to the platform, monitored them for signs of success, and then “buried” them when they became a competitive threat, the lawsuit said.
“This behavior is no less anticompetitive than if Facebook bribed aspiring app competitors not to compete,” said Holly Vedova, executive director of the FTC Bureau of Competition. “The antitrust laws were put in place to prevent this type of illegal activity by monopolists. Facebook’s actions have suppressed innovations and improvements in product quality. And they have made the social networking experience worse by exposing users to lower levels of privacy and privacy and more intrusive advertisements. Today’s action by the FTC is aimed at putting an end to this illegal activity and restoring competition for the benefit of Americans and honest businesses alike. “
The FTC’s lawsuit against Facebook aims to divest Instagram and WhatsApp; The former is how the company managed to stay relevant after social media went mobile, and the latter is arguably the largest messaging app in the world. The division of these vital assets would have a significant impact on Facebook around the world, and other tech companies could be forced to reverse or halt acquisitions of potential competitors.
What the amended complaint says
The amended complaint, filed in the U.S. District Court for the District of Columbia, followed a 28th March complaint Dismissal the original complaint from the labor inspectorate. The recently filed amended complaint “contains additional data and evidence to support the FTC’s claim that Facebook is a monopoly that is abusing its excessive market power to remove threats to its dominance,” the FTC said.
- Facebook was unsettled about the cell phone: A critical transition period in the history of the Internet and in the history of Facebook, according to the amended complaint, was the advent of smartphones and the mobile Internet in the 2010s. Facebook boss Mark Zuckerberg recognized at the time that “we are vulnerable in mobile communications”, and a major shareholder feared that Facebook’s weakness in mobile communications “carries the risk of the unthinkable happening – of being overlaid by another network”.
- Acquisition of competitors: “After Facebook suffered significant failures during this critical transition phase, it found that it lacked the business talent and technical acumen to quickly and successfully integrate its outdated desktop-based technology into the new era of mobile-first communication,” said the FTC. “Facebook executives countered this existential threat by buying up the new mobile innovators, including competitor Instagram in 2012 and WhatsApp mobile messaging app in 2014, which succeeded where Facebook had failed. The company complemented its anti-competitive shopping spree with an open-first-close-later program that helped cement its monopoly by severely hampering the ability of rivals and would-be rivals to compete on the matter. “
Facebook for developers blocks competition
“After launching the Facebook platform as an open space for third-party software developers, Facebook abruptly turned around and required developers to agree to terms that would prevent successful apps from becoming a competitive threat to Facebook,” the FTC said. “Developers who relied on Facebook’s open access guidelines were overwhelmed by new limits on their interoperability. Facebook’s behavior has not only harmed developers […] it also deprived consumers of promising and disruptive outsiders who could have forced Facebook to improve its own products and services. “
- Obstacles and switching costs: “Facebook’s dominant position is also protected by significant barriers to entry, including high switching costs,” the FTC said, arguing that networks of friends added on the site cannot be ported to a competing service. “Other significant barriers to entry are user-to-user effects, known as network effects, which make a personal social network more valuable when more users join the service.”
- Facebook is still aggressive towards competitors: “According to the amended complaint, Facebook continues to monitor the industry for competitive threats to its monopoly on social networks,” the FTC said. “Facebook is likely to impose anti-competitive conditions on access to its platform and attempt to acquire companies it perceives as a potential threat, especially the next time it faces ‘acute competitive pressures from a time of technological change’,” it said in the lawsuit.
Contradiction: Christine S Wilson, one of the FTC commissioners, said in a different Note that it would be inappropriate for the FTC to contest the Instagram and WhatsApp acquisitions after they were specifically approved by Congress. “The main allegations in the amended lawsuit relate to Facebook’s acquisitions of Instagram and WhatsApp, transactions that the FTC previously assessed and continued under the Hart Scott Rodino pre-merger filing process. I think it is bad policy to undermine the integrity of the pre-merger notification process established by Congress and the calm it offers to the merging parties who have faithfully complied with its requirements, “said Wilson.
Timeline: FTC vs. Facebook
The case of the dissolution of Facebook was the first filed from the FTC along with 46 US states December 8, 2020. The lawsuit, with bipartisan support, alleged that Facebook violated antitrust laws by taking over WhatsApp and Instagram, among others. It sought to split the products in order to end what Facebook called a monopoly.
on June 28, 2021, Judge James E. Boasberg dismiss the petition, a blow to the FTC’s efforts. Boasberg said the FTC had not sufficiently substantiated its claim that Facebook had a monopoly. The judge gave the FTC time to resubmit the case with this evidence.
on July 14, 2021, Facebook requested the FTC that Lina Khan, chairwoman of the commission, should be disqualified from a case against Facebook for earlier statements about the company’s business practices. “The FTC’s Office of General Counsel has carefully considered Facebook’s petition to withdraw Chairwoman Lina M. Khan. Since the case is being prosecuted before a federal judge, the company will be provided with the appropriate constitutional protective measures. The secretary’s office rejected the petition, ”the FTC said later said.
on August 19, 2021, this amended application has been submitted.
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