(Noted News) — The U.S. Federal Trade Commission (FTC) has joined forces with 48 states and districts to file lawsuits against Facebook, accusing the social media giant of abusing its power to destroy competition and create an unfair monopoly. This lawsuit could result in Facebook being forced to sell off its crown jewel assets, Instagram and WhatsApp.
This legal action mirrors a similar case filed in October against Google’s parent company Alphabet Inc when the Justice Department accused them of largely the same thing. It follows the Trump administration’s vocal desire to break up Big Tech, however, the suits against Facebook were bipartisan, with both Republican and Democratic Attorney Generals coming together in a rare agreement to shake up Facebook’s digital stronghold.
Guam, D.C., and 46 states formed the lawsuit. The only states that did not participate were Alabama, Georgia, South Carolina, and South Dakota.
Letitia James, Attorney General of New York, said in a statement that “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.”
In response to the accusations, Facebook’s general counsel Jennifer Newstead penned a blog post titled “Lawsuits Filed by the FTC and the State Attorneys General Are Revisionist History”
The post generally makes the case that everything Facebook did to reach its level of popularity and power was through ethical practices and normal, innovative strategies to compete.
With much of the focus being on Facebook’s big acquisitions of Instagram for $1 billion, and Whatsapp for $19 billion, Newstead said that no one had any issue with it at the time, but now all the sudden the government wants to go back in time and have a “do-over.”
“These transactions were intended to provide better products for the people who use them, and they unquestionably did. Both of these acquisitions were reviewed by relevant antitrust regulators at the time… Regulators correctly allowed these deals to move forward because they did not threaten competition.”
“Now, many years later, with seemingly no regard for settled law or the consequences to innovation and investment, the agency is saying it got it wrong and wants a do-over. In addition to being revisionist history, this is simply not how the antitrust laws are supposed to work. No American antitrust enforcer has ever brought a case like this before, and for good reason.”
Newstead also argues that Facebook has been a net positive for so many small businesses, allowing them to boost their exposure with prime advertising spots on the network.
“And just as people choose to use Facebook, so too do millions of businesses large and small choose to use our free tools and advertising products. We compete for advertising dollars with other digital platforms, from Google to TikTok, and with other channels such as television, radio, and print. Businesses choose us because our apps and services deliver real value. Unfortunately, these lawsuits misunderstand the advertising landscape and offer instead a distorted view of how advertisers spend to reach their target audiences.”
However, Newstead’s beliefs regarding the benefits of Facebook on small businesses run contrary to those of Attorney General James. James said that their lawsuit was specifically in the name of “taking action to stand up for the millions of consumers and many small businesses that have been harmed by Facebook’s illegal behavior.”
Facebook CEO Mark Zuckerberg has previously vowed to defend Facebook against a breakup at all costs, telling employees last year that if the government ever tried to break them up, “then I would bet that we will have a legal challenge, and I would bet that we will win the legal challenge.”
“At the end of the day, if someone’s going to try to threaten something that existential, you go to the mat and you fight.”
He also believes the case will drag out for a long time, referring to the lawsuit as “one step in a process which could take years to play out in its entirety.”
The lawsuit against Facebook managed to dig through the company’s email records and find an email from Zuckerberg that stated, “it is better to buy than compete,” something which may be a vulnerable spot in their defense.
Antitrust experts are divided on whether or not the suits will have any meaningful effect on Facebook’s business strategy, and whether they will produce the desired outcome of a break up of its subsidiaries or merely delay their inevitable monopolistic ventures.
Shares in Facebook dropped about 2% on the news.