The United States is tackling a digital juggernaut. Several American authorities have indeed accused Facebook, Wednesday, December 9, 2020, of abusing its dominant position and its well-filled coffers to oust the competition and asked the courts to force the group to separate from Instagram and WhatsApp . The anti-competitive practices of the social network harm consumers by leaving them less choice and reducing the protection of their private data, argue the United States Competition Commission (FTC) and prosecutors representing 48 states and territories in the country in 2 separate complaints. They also leave advertisers few alternatives for placing their advertisements.
The complainants particularly blame Facebook for the takeovers of the Instagram application, in 2012 for $ 1 billion, and of WhatsApp messaging, in 2014 for $ 22 billion. But they also attack the conditions imposed by Facebook on software developers. The FTC is therefore asking the courts to eventually force Facebook to resell Instagram and WhatsApp.
The agency also wants Mark Zuckerberg’s group to stop forcing developers to accept certain conditions and ask him for his green light for any takeover operation. Prosecutors are demanding for their part to be notified of any acquisition exceeding $ 10 million. They also call for justice to possibly force Facebook to separate from certain subsidiaries or activities.
Crush potential threats
“Using the vast resources at its disposal in terms of data and money, Facebook crushed or hampered what the company saw as potential threats,” said New York State Attorney General Letitia James , during a press conference. In doing so, the group “reduces consumer choice, stifles innovation, degrades the protection of the privacy of millions of Americans,” she said. But more than half of Americans log on to Facebook every day, Ms. James recalled. And, while they spend time chatting on the social network, “Facebook spends its time monitoring and profiting from users and their personal information.” “No company should have such power over our personal information and our social interactions without control,” said the prosecutor.
Similar anti-competitive charges were launched in the late 1990s against the computer group Microsoft. After nearly three years of proceedings, the Ministry of Justice had however failed to dismantle the firm. For Baird analysts, it is “very unlikely” that the plaintiffs will achieve their ends. At the time of the Instagram and WhatsApp takeovers, Facebook was far from being in a monopoly position and still faces significant competition today, they argue in a note.
From Twitter to YouTube, via TikTok, Snapchat, WeChat, Triller, Discord or Reddit, there are in fact several other major social networks. And, if Instagram and WhatsApp have become so important, it is in large part thanks to technologies developed by Facebook, add analysts at Baird. On Wednesday, the social network denounced a “revisionist story” and promised to defend itself “vigorously”. Especially, argues the company, that the acquisitions in question have received the green light from the competition authorities before their finalization.
“Shameless predator”
Individuals and businesses don’t choose to use Facebook “because they have to,” but “because our apps and services deliver the most value,” said Jennifer Newstead, Legal Manager at Facebook. For Christopher Sagers, a law professor at Cleveland Public University, the complaints presented Wednesday are “important and ambitious.” If the group has been criticized for having poorly protected the data of its users, it has long enjoyed a certain leniency as regards its anti-competitive practices even though it “behaved like a shameless predator and seeking to exclude in all the sectors in which he has been involved, ”he said.
The procedures are also interesting, because they target acquisitions of companies that were not in direct competition with Facebook. The Gafams (Google, Apple, Facebook, Amazon and Microsoft) are generally in the crosshairs of the American authorities, who suspect them of taking advantage of their dominant position to crush their competitors. The Ministry of Justice and eleven states thus launched proceedings against Google in mid-October, accusing the group of abusing a quasi-hegemony with its search engine.
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
