FTC alleges Facebook resorted to illegal buy-or-bury scheme to maintain monopoly

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FTC (Federal Trade Commission) has issued an amended complaint against Facebook with additional evidence, claiming that the social network has maintained a monopoly through unfair practices.

Previously, the FTC had 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 sought 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.

A report by The Washington Post mentioned that a federal judge had dismissed two antitrust lawsuits against Facebook, US District Judge James E. Boasberg said the FTC had failed to offer enough facts in its complaint to prove its assertion that Facebook controlled 60 percent of the social media market.

In the amended complaint against Facebook, in the agency’s ongoing federal antitrust case, FTC mentions, “The complaint alleges that after repeated failed attempts to develop innovative mobile features for its network, Facebook instead resorted to an illegal buy-or-bury scheme to maintain its dominance. It unlawfully acquired innovative competitors with popular mobile features that succeeded where Facebook’s own offerings fell flat or fell apart”.

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FTC adds, “Facebook lured app developers to the platform, surveilled them for signs of success, and then buried them when they became competitive threats. Lacking serious competition, Facebook has been able to hone a surveillance-based advertising model and impose ever-increasing burdens on its users”.

According to FTC, a huge part of the digital transition phase was supported by the users’ dependence and increased use of smartphones and mobile internet, and Facebook suffered significant failures during this critical period. And, Facebook resorted to an “anticompetitive shopping spree”, buying up the new mobile innovators, after failing to maintain its monopoly or its advertising profits by fairly competing.

In a series of Tweets responding to FTC’s amended complaint, Facebook states that the company fights to win user’s time and attention and will continue to defend their company, further questioning the approvals garnered for the acquisitions.

The company states, “There was no valid claim that Facebook was a monopolist — and that has not changed. Our acquisitions of Instagram and WhatsApp were reviewed and cleared many years ago, and our platform policies were lawful”.

Facebook further stated that the amended complaint declares “to the business community that no sale is ever final”, and questions settled expectations of merger review.

The FTC filed the amended complaint today in the U.S. District Court for the District of Columbia, following the court’s June 28 ruling on the FTC’s initial complaint. The amended complaint includes additional data and evidence to support the FTC’s claim that Facebook is a monopolist.