The FTC (Federal Trade Commission) has sued Facebook, alleging that the company has been illegally maintaining a social networking monopoly through a systematic strategy of anticompetitive conduct, including the acquisition of Instagram & Facebook.
The FTC is seeking a permanent injunction in federal court that could lead to WhatsApp & Instagram being sold off and separated from its parent company – Facebook, divestitures of assets, prohibit Facebook from imposing anticompetitive conditions on software developers; and require Facebook to seek prior notice and approval for future mergers and acquisitions.
FTC believes that Facebook’s anticompetitive conduct leaves consumers with fewer choices, and deprives advertisers of the benefits of competition. The complaint was issued following a lengthy investigation in cooperation with a coalition of the attorneys general of 46 states, the District of Columbia, and Guam,
Ian Conner, Director of the FTC’s Bureau of Competition mentions, “Facebook’s actions to entrench and maintain its monopoly deny consumers the benefits of competition. Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive”.
The complaint by FTC alleges that Facebook targeted potential competitive threats to maintain its monopoly and executed anticompetitive acquistions, whenever an innovative platform or a category leader emerged cupported by rapid growth.
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The complaint claims that Facebook initially tried to compete with Instagram by improving its own offerings, but seeing that more consumers were shifting to mobile and desktop and embracing photo-sharing, a core functionality of Instagram, the company ultimately decided to acquire Instagram for $1 billion in April 2012, eliminating an existential threat to Facebook.
Similarly, when WhatsApp was spearheading mobile messaging, Facebook announced an agreement in February 2014 to acquire WhatsApp for $19 billion, neutralixing the threat posed by WhatsApp against Facebook.
The complaint also alleges that Facebook, over the course of several years, has imposed anticompetitive conditions on third-party software developers’ access to valuable interconnections to its platform, such as the application programming interfaces (APIs) that allow the developers’ apps to interface with Facebook, .
In particular, Facebook allegedly has made key APIs available to third-party applications only on the condition that they refrain from developing competing functionalities, and from connecting with or promoting other social networking services.
The complaint mentions Facebook has enforced these policies and cut off access to the APIs to interrupt perceived competitive threats from rival social networks.
For instance, in 2013, Twitter launched the app Vine, which allowed users to shoot and share short video segments. In response, according to the complaint, Facebook shut down the API that would have allowed Vine to access friends via Facebook.