NPI's Cascadia Advocate

Offering commentary and analysis from Washington, Oregon, and Idaho, The Cascadia Advocate is the Northwest Progressive Institute's unconventional perspective on world, national, and local politics.

Wednesday, December 9th, 2020

Federal, state governments allege Facebook is an illegal monopoly in major antitrust case

At long last, it’s account­abil­i­ty time for Mark Zucker­berg’s online empire.

Hav­ing fool­ish­ly cho­sen to allow Face­book’s acqui­si­tions of What­sapp and Insta­gram sev­er­al years ago, the fed­er­al gov­ern­ment is now belat­ed­ly mov­ing to unwind those merg­ers as well as stop the grow­ing pow­er and anti­com­pet­i­tive behav­iors of Face­book, the biggest social net­work­ing com­pa­ny in the world.

“The FTC is seek­ing a per­ma­nent injunc­tion in fed­er­al court that could, among oth­er things: require divesti­tures of assets, includ­ing Insta­gram and What­sApp; pro­hib­it Face­book from impos­ing anti­com­pet­i­tive con­di­tions on soft­ware devel­op­ers; and require Face­book to seek pri­or notice and approval for future merg­ers and acqui­si­tions,” the agen­cy’s announce­ment of legal action says.

The fifty-three page com­plaint alleges that Face­book has been ille­gal­ly sup­press­ing, neu­tral­iz­ing, and deter­ring the emer­gence and growth of per­son­al social net­work­ing rivals so that it can main­tain and expand its lucra­tive, pri­va­cy-inva­sive busi­ness. The firm gen­er­at­ed rev­enues of more than $70 bil­lion and prof­its of more than $18.5 bil­lion in the last year alone, the FTC says.

“Per­son­al social net­work­ing is cen­tral to the lives of mil­lions of Amer­i­cans,” said Ian Con­ner, Direc­tor of the FTC’s Bureau of Competition.

“Facebook’s actions to entrench and main­tain its monop­oly deny con­sumers the ben­e­fits of com­pe­ti­tion. Our aim is to roll back Facebook’s anti­com­pet­i­tive con­duct and restore com­pe­ti­tion so that inno­va­tion and free com­pe­ti­tion can thrive.”

Join­ing the FTC in going to court against Face­book are near­ly all of the coun­try’s state gov­ern­ments, rep­re­sent­ed by their attor­neys gen­er­al. Wash­ing­ton, Ore­gon, Ida­ho, and Alas­ka are all par­tic­i­pants in the suit, along with Cal­i­for­nia and Hawaii. The states filed their action in the U.S. Dis­trict Court for the Dis­trict of Colum­bia, and they allege that Face­book is in vio­la­tion of the Clay­ton Antitrust Act.

The states of Geor­gia, South Dako­ta, Alaba­ma and South Car­oli­na are not part of the land­mark, bipar­ti­san law­suit, but D.C. and Guam are.

“Face­book has become a main­stay in many people’s lives,” Wash­ing­ton State Attor­ney Gen­er­al Bob Fer­gu­son said. “The com­pa­ny has done every­thing it can to keep it that way, from unlaw­ful­ly swal­low­ing up its poten­tial com­peti­tors to walk­ing back its pri­va­cy pro­tec­tion promis­es. Face­book has built a fortress around its pow­er in the mar­ket that not even an inter­na­tion­al data pri­va­cy scan­dal could break. No sin­gle com­pa­ny should have that much power.”

Fer­gu­son — who has nev­er been afraid to go after pow­er­ful inter­ests — has pre­vi­ous­ly sued Face­book for will­ful­ly and repeat­ed­ly vio­lat­ing Wash­ing­ton State’s pub­lic dis­clo­sure laws. Despite its immense resources, Face­book has cho­sen not to com­ply with the require­ments set forth by RCW Chap­ter 42.17A.

Facebook is ubiquitous

Face­book has bil­lions of users and is pret­ty much unavoid­able, even to a light Inter­net user, due to its ten­ta­cles (Illus­tra­tion by Geralt)

“We face com­pe­ti­tion in every aspect of our busi­ness,” Face­book lame­ly claimed in a response post­ed after the suits were announced.

“Of course, we are aware of the atmos­phere in which the Fed­er­al Trade Com­mis­sion is bring­ing this case. Impor­tant ques­tions are being asked about ‘big tech’ and whether Face­book and its com­peti­tors are mak­ing the right deci­sions around things like elec­tions, harm­ful con­tent and pri­va­cy,” the com­pa­ny’s gen­er­al coun­sel and vice pres­i­dent Jen­nifer New­stead said.

“We have tak­en many steps to address those issues, and we’re far from done,” New­stead went on to claim. “We have called for new reg­u­la­tion to address some of them on an indus­try-wide basis. But none of these issues are antitrust con­cerns, and the FTC’s case would do noth­ing to address them.”

Has New­stead even read the com­plaints? We have.

There are def­i­nite­ly oth­er issues involv­ing Face­book that peo­ple care about. But there are strong and legit­i­mate grounds for an antitrust case against Facebook.

That is why both the FTC and near­ly every state gov­ern­ment, whether led by Democ­rats or Repub­li­cans, are bring­ing these actions today.

We live in very polar­ized times. But Face­book has become such a bad and pow­er­ful actor that near­ly every state’s depart­ment of law reached a joint con­clu­sion that it’s an ille­gal monop­oly that needs to be bro­ken up.

That’s some­thing to mar­vel at.

It is a fact that Face­book was allowed to acquire What­sapp and Insta­gram years ago, as I said at the begin­ning of this post. That was a mistake.

How­ev­er, just because those acqui­si­tions were unwise­ly allowed then does not mean Face­book should get a pass for its ille­gal behav­ior now.

There is no oth­er social net­work­ing com­pa­ny with Face­book’s size and pow­er. It is in a league of its own. Twit­ter, Tik­Tok, Snapchat, Microsoft­’s LinkedIn, and oth­er play­ers are a frac­tion of Face­book’s mam­moth size.

No oth­er social net­work has Face­book’s reach, and that is because Face­book has gone to great lengths to make sure it would not have seri­ous competition.

The FTC notes in its com­plaint that Face­book attempt­ed to buy both Twit­ter and Snapchat, quot­ing from a 2008 email that bil­lion­aire Face­book boss Mark Zucker­berg wrote to one of his employ­ees in which he said: “I was look­ing for­ward to the extra time that would have giv­en us to get our prod­uct in order with­out hav­ing to wor­ry about a com­peti­tor [Twit­ter] growing.”

For too long, Mark Zucker­berg has been allowed to dic­tate the terms under which Face­book “com­petes” in the social net­work­ing indus­try. That needs to end. It’s time for Face­book to be bro­ken up. Insta­gram and What­sapp should become sep­a­rate com­pa­nies, and con­di­tions should be imposed on Face­book’s busi­ness prac­tices. Self-reg­u­la­tion has utter­ly failed, and Face­book does not deserve any more chances to clean up its act. Antitrust action is needed.

We thank the FTC and the states for bring­ing these long over­due cases.

Here is the FTC’s (redact­ed) com­plaint if you’d like to read it.

The FTC’s com­plaint against Facebook

And here is the states’ joint com­plaint if you’d like to read that.

States’ com­plaint against Facebook

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