Facebook is being sued by the FTC, says it has “monopoly power”
Buckle up, we’re in for a ride.
Facebook purchased Instagram for $1 billion in 2012. In 2014, it purchased WhatsApp. Throughout its existence, Facebook has acquired over 70 companies. Now, the Federal Trade Commission is suing Facebook, stating that the company “is illegally maintaining its personal social networking monopoly through a years-long course of anticompetitive conduct.”
While there is a lot to unpack here, one thing that should prove interesting is that the FTC cleared both of these acquisitions when they occurred. Facebook is echoing those sentiments, with Jennifer Newstead, a Facebook VP and general counsel., stating, “The most important fact in this case, which the Commission does not mention in its 53-page complaint, is that it cleared these acquisitions years ago.” Newstead goes on to say, “The government now wants a do-over, sending a chilling warning to American business that no sale is ever final.”
It’s no secret that Facebook gobbles up companies that might be a threat. Instagram is the most glaring example. The company also throws its pile of money around to copy features found in other apps and social platforms. It also uses its massive footprint to make API integration difficult, if not impossible, for other platforms. Remember Vine? Remember its friend-finding feature? Facebook was quick to cut the feature off after Twitter purchased the company.
There’s also a damning email between Mark Zuckerberg and David Ebersman, who was Facebook’s CFO at the time
These emails, revealed earlier this year, show Zuckerberg looking at competitors to neutralize. In the email, Zuckerberg writes, “One way of looking at this is that what we’re really buying is time. Even if some new competitors springs up, buying Instagram, Path, Foursquare, etc now will give us a year or more to integrate their dynamics before anyone can get close to their scale again. Within that time, if we incorporate the social mechanics they were using, those new products won’t get much traction since we’ll already have their mechanics deployed at scale.”
Then, in a quick follow-up email, Zuckerberg states, “I didn’t mean to imply that we’d be buying them to prevent them from competing with us in any way.” Oops.
So, what does the FTC want to happen? According to the press release linked above, “Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive.”
This is going to be a historic case, so buckle up, we’re in for a ride.
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