The Federal Trade Commission has officially filed suit against Facebook Inc. in United States District Court for the District of Columbia, asking for “equitable relief” against Facebook to prevent it’s “anticompetitive conduct and unfair methods of competition.”
The FTC is attempting to draw legal action toward the social media giant and potentially break them up and/or prevent them from continuing their aggressive offensive style of brand protection.
“Facebook has maintained its monopoly position by buying up companies that present competitive threats and by imposing restrictive policies that unjustifiably hinder actual or potential rivals that Facebook does not or cannot acquire,” the commission said in the.
According to USA Today’s coverage of the action, attorney generals from 48 states and territories said they were filing their own lawsuit against Facebook, reflecting the broad and bipartisan concern about how much power Facebook and its CEO, Mark Zuckerberg, have accumulated on the internet.
The suit brought by the FTC is requesting that the court “divestiture of assets, divestiture or reconstruction of businesses (including, but not limited to, Instagram and/or WhatsApp),” in addition to whatever other relief the court might consider worthy, under the circumstances they put forth.
News of the potential court-ordered changes to Facebook is something that has been talked about for years as the social media platform has eaten up other social sites, such as Instagram. Even without the impressive acquisitions, however, Facebook’s growth over the past decade has been meteoric in speed and trajectory, and due to the groundbreaking nature of the technology the platform was built on, there has been little government oversight.
The lawsuit, which can be found in its entirety on the FTC website, cites that “Facebook holds monopoly power in the market for personal social networking services … in the United States, which it enjoys primarily through its control of the largest and most profitable social network in the world…”
The suit goes on to make its case for requesting relief from the Silicon Valley monster’s single-handed grip on the technology, saying that not only has it become the biggest and the best, it’s also brought in “staggering profits” saying that it “monetizes its personal social networking monopoly principally by selling advertising, which exploits a rich set of data about users’ activities, interests, and affiliations to target advertisements to users.
“Last year alone, Facebook generated revenues of more than $70 billion and profits of more than $18.5 billion,” the FTC’s suit states.
Possibly most concerning in their case is the way in which Facebook has gone about making competition with them a virtual impossibility, positioning themselves to stifle any competitor that could cause any major threat to user activity.
“Since toppling early rival Myspace and achieving monopoly power, Facebook has turned to playing defense through anticompetitive means. After identifying two significant competitive threats to its dominant position—Instagram and WhatsApp—Facebook moved to squelch those threats by buying the companies, reflecting CEO Mark Zuckerberg’s view, expressed in a 2008 email, that ‘it is better to buy than compete.’ To further entrench its position, Facebook has also imposed anticompetitive conditions that restricted access to its valuable platform—conditions that Facebook personnel recognized as ‘anti user[,]’ ‘hypocritical’ in light of Facebook’s purported mission of enabling sharing, and a signal that ‘we’re scared that we can’t compete on our own merits.’
“As Facebook has long recognized, its personal social networking monopoly is protected by high barriers to entry, including strong network effects. In particular, because a personal social network is generally more valuable to a user when more of that user’s friends and family are already members, a new entrant faces significant difficulties in attracting a sufficient user base to compete with Facebook. Facebook’s internal documents confirm that it is very difficult to win users with a social networking product built around a particular social “mechanic” (i.e., a particular way to connect and interact with others, such as photo-sharing) that is already being used by an incumbent with dominant scale. Even an entrant with a “better” product often cannot succeed against the overwhelming network effects enjoyed by a dominant personal social network.
“In an effort to preserve its monopoly in the provision of personal social networking, Facebook has, for many years, continued to engage in a course of anticompetitive conduct with the aim of suppressing, neutralizing, and deterring serious competitive threats to Facebook Blue. This course of conduct has had three main elements: acquiring Instagram, acquiring WhatsApp, and the anticompetitive conditioning of access to its platform to suppress competition.
“In addition to its strategy of acquiring competitive threats to its personal social networking monopoly, Facebook has, over many years, announced and enforced anticompetitive conditions on access to its valuable platform interconnections, such as the application programming interfaces (“APIs”) that it makes available to third-party software applications.
“Facebook has made key APIs available to third-party apps only on the condition that they refrain from providing the same core functions that Facebook offers, including through Facebook Blue and Facebook Messenger, and from connecting with or promoting other social networks.”
