US antitrust siege of tech widens with lawsuits vs Fb
WASHINGTON (AP) – The giant tech companies, whose services are tied into the fabric of social life, are now the target of mounting attack from government competition authorities. Regulators filed pioneering antitrust lawsuits against Facebook on Wednesday, the government’s second major offensive this year against what were once seemingly inviolable tech giants.
The Federal Trade Commission and 48 states and districts sued the social network giant, accusing it of abusing its market power to suppress smaller competitors, and looking for remedial action that would include a forced spin-off of coveted Instagram and WhatsApp messaging services from Facebook. The company’s behavior has constrained consumer choices and damaged their privacy, regulators said.
Big tech companies, once hailed as innovators and job makers and largely left alone by Washington for nearly two decades, have seen their political fate sink. Facebook, Google, Amazon and Apple have all been scrutinized by Congress, federal regulators, attorneys general and European authorities. Their once considerable political support in Congress has waned.
Legislators from both major parties are campaigning for greater control of the industry, arguing that its massive market power is spiraling out of control, crushing smaller competitors and endangering consumer privacy.
It is unlikely that the pressure will ease. President-elect Joe Biden said the split from big tech giants should be seriously considered.
Lawmakers and consumer advocates have accused Facebook of anticompetitive behavior, mostly by buying up emerging smaller competitors like Instagram and WhatsApp and copying features introduced by competitors. Critics say such tactics could stifle competition and limit possible alternatives for consumers looking for, for example, comparable services that have less tracking for targeted advertising. Businesses, including mom and pop stores, may have to pay more for ads when they have fewer choices to reach consumers online.
The new lawsuits were announced by the FTC and New York Attorney General Letitia James and have resulted in separate investigations for the past year and a half.
The FTC said Facebook had a “systematic strategy” to take out its competition, including buying smaller emerging competitors like Instagram in 2012 and WhatsApp in 2014.
Speaking at a news conference, James said, “It is really critical that we block this predatory company acquisition and restore confidence in the market.”
“For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and shut down competition, all at the expense of everyday users,” said James, a Democrat. “They have reduced consumer choice. They have stifled innovation and degraded privacy for millions of Americans.”
Calling the government’s claims “revisionist story” punishing successful businesses, Facebook noted that the FTC approved the acquisitions of Instagram and WhatsApp years ago. “The government now wants a revision and is sending a terrifying warning to the American economy that no sale is ever final,” Facebook general counsel Jennifer Newstead said in a statement.
Antitrust skeptics point to newer social media services like TikTok and Snapchat as rivals that could “overtake” older platforms like Facebook.
Facebook is the world’s largest social network with 2.7 billion users and a company with a market value of nearly $ 800 billion. CEO Mark Zuckerberg is the fifth richest individual in the world and the most public face of Big Tech Swagger.
James alleged Facebook had the practice of opening its website to third-party app developers and then abruptly cutting off developers who it viewed as a threat. The lawsuit, which includes 46 states, Guam and the District of Columbia, accuses Facebook of anticompetitive behavior and uses its dominance of the market to collect consumer data and generate a fortune in advertising revenue.
Online ads make up most of the company’s revenue, which reached over $ 70 billion last year.
Josh Stein, North Carolina attorney general who was a member of the executive committee of the attorneys general who conducted the investigation, said the lawsuit could transform the communications landscape much like the dissolution of AT & T’s local phone service monopoly in the early 1980s.
“We’re hoping to restructure the social networking market in the US, and there is a player right now,” Stein told reporters.
Antitrust expert Rebecca Allensworth, a law professor at Vanderbilt University, said it was “difficult to win an antitrust lawsuit and this is no different”. But when it comes to cartel cases, the government has a strong one.
“These lawsuits mark a major turning point in the struggle to contain the big tech monopolies and strengthen antitrust enforcement,” said Alex Harman, competition advocate for Public Citizen, a nonprofit consumer protection group.
The Justice Department sued Google in October for abusing its dominance in online search and advertising – the government’s most significant attempt to increase competition since its historic case against Microsoft two decades ago.
This lawsuit, announced just two weeks before election day, drew allegations of political motivation from some quarters. It was filed by a cabinet agency led by an attorney general who is seen as a close ally of President Donald Trump, who has often publicly criticized Google.
The FTC, on the other hand, is an independent regulator whose five commissioners currently include three Republicans and two Democrats. Two of the three Republicans, Noah Phillips and Christine Wilson, voted against the agency’s action against Facebook. And the coalition of 48 states and districts that sued Facebook is non-partisan.
Instagram and WhatsApp are among the 70 or so companies that Facebook has acquired over the past 15 years. But they are most often viewed by Facebook critics as traits that should be forked off.
Facebook paid just $ 1 billion for Instagram – one of the smartest deals in the industry – and bolstered the social network’s business a month before going public. At the time, the photo sharing app had around 30 million users and was generating no income. A few years later, Facebook acquired WhatsApp, an encrypted messaging service, for $ 19 billion.
Zuckerberg promised to run both companies independently, but over the years the services became increasingly integrated. Users can now link accounts and share content across platforms. Instagram now has more than 1 billion users worldwide. Such an integration could make it more difficult to abandon the companies.
Sisak reported from New York. AP journalists Barbara Ortutay, of Oakland, California, and Gary D. Robertson, of Raleigh, North Carolina, contributed to this report.