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.The FTC’s complaint against Facebook
And here is the states’ joint complaint if you’d like to read that.States’ complaint against Facebook