Facebook Facing a Lawsuit for Suppressing Competition By Purchasing Instagram and Whatsapp

Facebook Facing a Lawsuit for Suppressing Competition By Purchasing Instagram and Whatsapp

Two separate lawsuits have been filed against Facebook, claiming that the social media giant illegally bypassed competition by purchasing two of its rival companies, WhatsApp and Instagram. 

You don't need a legal background to see that Facebook has acquired itself a social media monopoly, however, the matter is now more seriously investigated as The Federal Trade Commission (FTC) as well as numerous attorney generals have filed two lawsuits against Facebook with the primary goal of divesting WhatsApp and Instagram. These lawsuits are claiming that Facebook, after the $1 billion purchase of Instagram in 2012 and the $19 billion acquisition of WhatsApp in 2014, has illegally crushed its competition, thus violating the Sherman Antitrust Act and the Clayton Antitrust Act.

New York Attorney General Letitia James, who is leading this legal action, explains that Facebook has managed to "crush smaller rivals and snuff out competition, all at the expense of everyday users" and instead of focusing on further developing and improving its own product, Facebook "took advantage of consumers and made billions of dollars converting their personal data into a cash cow." Whether it is a social media giant or a utilities company, Jennings says that either way monopolies like these are detrimental to the consumers in the long run because it deprives users of benefits that may ensue from competition among businesses. 

Furthermore, some of the actions FTC is seeking include a permanent injunction in federal court to divest Facebook assets, forbid imposition of "anti-competitive conditions on software developers", and also a requirement for Facebook to seek approval before any future mergers or acquisitions. 

Facebook has responded since by claiming that its products are actually good for personal and business users because their "apps and services deliver the most value". You can read the full complaints submitted by the plaintiffs here.

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5 Comments

Steve White's picture

I won't defend Facebook at all but the FTC has some explaining to do -- these very points were made at the time the FTC allowed Facebook to buy Instagram and WhatsApp.

Mutley Dastardly's picture

Let's hope the EU and the FTC make Facebook split. Privacy is important.

Black Z Eddie .'s picture

After FB's new layout, screw 'em. I hope FTC kicks 'em in the teeth. :D

Steve Powell's picture

Facebook is too big, and needs to split up.