US Federal Trade Commission, 46 states act to break up Facebook

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The social network is accused of abusing its dominance to wipe out competition and stymy innovation, among other things.

The US Federal Trade Commission (FTC) and a coalition of 46 states are taking action against Facebook with the intention of forcing the break-up of its business.

“Buy or bury”

New York’s Attorney General, Letitia James, told a press conference that claimed Facebook had a “buy or bury” approach to “crush smaller rivals”. She claimed this reduced consumers’ choice, hindered innovation and eroded privacy protections for “millions of Americans”.

She is leading the state action, with the District of Columbia and Guam participating too.

Instagram and WhatsApp

In particular, the state Attorney Generals and the FTC cite Facebook’s acquiring Instagram in 2012 and WhatsaApp for $19 billion in 2014 as examples of these practices. In both cases Facebook is accused of acquisition instead of competition when it saw them as potential threats.

Facebook tweeted that it is reviewing the complaints, but noted the government previously approved its acquisitions.

It also claimed officials are intending a “do-over with no regard for the impact that precedent would have on the broader business community” or its users.

Third-party developers

It doesn’t end there. Facebook is alleged to have imposed anti-competitive restrictions on third-party software developers, with the FTC claiming it made APIs available “only on the condition that they refrain from developing competing functionalities, and from connecting with or promoting other social networking services”.

The parties asked a district court to require Facebook to seek approval for future deals over $10 million; block it from imposing anti-competitive conditions on software developers; and force it to divest assets including Instagram and WhatsApp to restore competition.

Precedents

James commented, “We are pretty confident that we will succeed,” highlighting the break-up of AT&T in 1984 and Microsoft in 2000 as precedents.

An article in the Financial Times [subscription needed] pointed out that Instagram and WhatsApp are not integrated with Facebook and therefore could be hived off reasonably easily. The downside is the likelihood of a long, expensive legal battle which Facebook can better afford than its opponents.

On the other hand, Facebook is in trouble on other fronts too: the European Union is about to publish its plans to regulate big tech in the shape of the draft new Digital Services Act. This will include companies including Facebook to take greater responsibility for policing content published on their sites or face fines of up to 6%  of their turnover. The UK has announced plans to reign big tech in too.

Picture: Mark Zuckerberg, Facebook's Founder & CEO