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9 Dec, 2020 20:03

Facebook faces TWO antitrust lawsuits, as FTC and 48 US states & territories mount parallel challenges

Facebook faces TWO antitrust lawsuits, as FTC and 48 US states & territories mount parallel challenges

The Federal Trade Commission and a coalition of almost all state attorneys-general have sued Facebook for violation of the Sherman and Clayton antitrust acts over its ownership of WhatsApp and Instagram.

The FTC lawsuit was announced on Wednesday, as New York AG Letitia James made public that 47 of her colleagues from 45 states – as well as the District of Columbia and Guam – were launching a separate antitrust challenge before a DC federal court.

Any efforts to “stifle competition, hurt small business, reduce innovation and creativity, cut privacy protections, will be met with the full force of our offices,” James told reporters.

The lawsuit managed to unite Democrats and Republicans who are currently at odds over the US presidential election. Only four states – Alabama, Georgia, South Carolina and South Dakota – have not signed on to the effort led by James, a Democrat.

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Plaintiffs accused Facebook of having “monopoly power in the personal social networking market” in the US over the past decade, and illegally maintaining it by “deploying a buy-or-bury strategy that thwarts competition and harms both users and advertisers.” 

Companies that intruded on its turf were offered a buy-out and if they resisted the pressure, CEO Mark Zuckerberg would go into “destroy mode” and subject them to the “wrath of Mark,” the lawsuit said, citing internal Facebook emails presented during the antitrust hearings in the House of Representatives earlier this year.

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Though bipartisan, the lawsuit follows through on the threats by congressional Democrats in October to break up Big Tech, accusing Facebook, Google, Apple and Amazon of monopolistic practices.

While the FTC cooperated with the coalition of attorneys-general, the federal agency filed its own separate lawsuit against Facebook, accusing the Menlo Park behemoth of a “systematic strategy… to eliminate threats to its monopoly.” 

Calling social networking “central to the lives of millions of Americans,” director of the FTC’s Bureau of Competition Ian Conner said the agency’s aim is “to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive.”

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The FTC is seeking a permanent injunction in federal court that would require Facebook to sell Instagram and WhatsApp, seek prior notice for future mergers and acquisitions, and be prohibited from imposing “anticompetitive conditions” on software developers.

Saying it was it "reviewing the complaints and will have more to say soon," Facebook noted that the FTC had cleared their acquisitions but "now wants a do-over with no regard for the impact that precedent would have on the broader business community or the people who choose our products every day."

Facebook stock dropped by almost four points following the announcements.

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