The court ruled on June 28 to dismiss an initial complaint from the FTC on this matter due to insufficient evidence related to how the agency calculated that Facebook controls more than 60 percent of the market for social media networks. At the time, the FTC was told it could get an injunction if it made it clear that a violation of the statute in question was in progress or about to occur. The FTC then requested an extension to refile its lawsuit, which was granted; they subsequently filed their revised complaint in the U.S. District Court for the District of Columbia on August 19.
In the amended complaint, Facebook is accused of dominating the American social networking market. It supplies a mountain of evidence supporting claims by the FTC that Facebook is a monopolist. According to a statement by the FTC, the social media giant carried out an unlawful “anticompetitive shopping spree” aimed at snapping up its more innovative rivals, such as WhatsApp and Instagram, in a bid to protect its monopoly.
The new complaint is longer than the first one, at 80 pages versus 53, although it does maintain some of the same arguments, including allegations of anticompetitive acquisitions and unfairly blocking rivals from accessing its application programming interface.
Complaint asks court to order Facebook to sell Instagram and WhatsApp
The complaint also asks the court to order the company to sell assets like WhatsApp, which it purchased for $19 billion in 2014, and Instagram, which it snagged for $1 billion in 2012. According to the FTC, Facebook's modus operandi is luring app developers over to its platform and then forcing them to agree to very restrictive conditions that have the effect of wiping them out once they are deemed a threat.
The FTC statement said: “By pulling this bait and switch on developers, Facebook insulated itself from competition during a critical period of technological change. Developers that had relied on Facebook’s open-access policies were crushed by new limits on their ability to interoperate.”
In addition to damaging developers, Facebook's actions impacted consumers by depriving them of “disruptive mavericks” that may have forced Facebook to up its own game. The suit also accuses them of engaging in activities that degrade user experience, such as mishandling user data. One example that they cited is the 2019 user privacy abuses that ended with a $5 billion penalty and a settlement.
The company has been given until October 4 to respond, and they have said that they are reviewing the complaint and will make a comment soon.
In a statement, the Acting Director of the FTC Bureau of Competition, Holly Vedova, said: “Facebook lacked the business acumen and technical talent to survive the transition to mobile. After failing to compete with new innovators, Facebook illegally bought or buried them when their popularity became an existential threat.”
She went on to liken their behavior to bribing emerging app competitors to get them not to compete.
“The antitrust laws were enacted to prevent precisely this type of illegal activity by monopolists,” she added, before accusing Facebook of suppressing innovation, subjecting users to reduced levels of privacy and data protection, and hitting them with more intrusive ads.
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