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.

“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.

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