Saturday, July 31, 2021

Social media giant, ‘Facebook’ faces U.S. legal action over competition


The recent lawsuit by the Federal Trade Commission may be the most notable legal action taken by the US Government against the Social Media giant, “Facebook”. The states and Federal Trade Commission (FTC) are targeting Facebook’s 2012 acquisition of Instagram, 2014 purchase of WhatsApp and rules governing outside software developers. The officials are praying the court to consider breaking up the company.

They accused Facebook of adopting a“buy or bury” strategy to potential rivals. This approach it has been alleged hurts competitors and users who have lost control of their own data to support the firm’s advertising revenue. These allegations, the litigants corroborated in the court processes by citing internal messages from Facebook boss Mark Zuckerberg. This included a 2008 email where it reads “better to buy than to compete”

New York Attorney General Letitia James, who is leading the legal fight by the state has directly accused Facebook of employing its dominance and monopoly power as a tool to crush smaller rivals and suffocate competition at the expense of everyday users. He stipulated that the basis of the recent legal action is to break Facebook unchecked power over social and personal interaction. Facebook, Facebook Messenger, WhatsApp and Instagram – all owned by Facebook – all have more than a billion monthly users. WhatsApp and Facebook have more than two billion. This is massive power!

The crux of the argument of the Federal Trade Commission (FTC) is that there’s an underlining tone why Facebook came to dominate this highly lucrative sector and this must be checked. And hence, the reason why Facebook is facing US legal action.

Facebook has however maintained that the deals under evaluation were vetted by regulators years ago and the litigation now coming up is an indirect threat to American business. Jennifer Newstead, Facebook General Counsel in a rebuttal said the social media giant has invested millions into its various business platforms like Instagram and WhatsApp which has gone on to become very successful and the company was ready to defend this.

Whether Instagram and WhatsApp will now be cut off from Facebook is left for the courts to determine. This may not be anytime soon as these antitrust lawsuits take time.


Photo Credit: Reuters

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