Facebook Slammed with Dual Antitrust Lawsuits, May Be Forced to Divest Instagram and Whatsapp

UTC by Godfrey Benjamin · 3 min read
Facebook Slammed with Dual Antitrust Lawsuits, May Be Forced to Divest Instagram and Whatsapp
Photo: Depositphotos

Amid the news about the lawsuits, Facebook stock closed trading on Wednesday with a 1.93% loss to $277.92

Social media giant Facebook Inc (NASDAQ: FB) is under the spotlight as it has been hit with two antitrust lawsuits both at the state and federal level. According to a TechCrunch report, the Facebook antitrust lawsuit from the state level was filed by what looks like a coalition involving the attorney generals from 46 US states, the territory of Guam, and the District of Columbia.

The lawsuit which excludes four states including Alabama, South Dakota, Georgia, and South Carolina faults Facebook’s targeted suppression of competition through a track record of its acquisitions. The acquisitions, citing Instagram and Whatsapp were noted by the attorney generals as “illegally” done and in a “predatory manner” and that Facebook did this in order to grow and preserve its market power.

In its demands, the attorney generals backing the lawsuit asks the US District Court for the District of Columbia to “restrain Facebook from making further acquisitions valued at or in excess of $10 million” without notifying the plaintiff states in advance. The lawsuit also asks the court for “any additional relief it determines is appropriate, including the divestiture or restructuring of illegally acquired companies, or current Facebook assets or business lines.”

New York Attorney General Letitia James is leading the group of petitioners and according to him, “almost every state in this nation has joined this bipartisan lawsuit because Facebook’s efforts to dominate the market were as illegal as they were harmful. Today’s suit should send a clear message to Facebook and every other company that any efforts to stifle competition, reduce innovation, or cut privacy protections will be met with the full force of our offices.”

Facebook Antitrust Lawsuits: the FTC Angle

The Federal Trade Commission (FTC) has almost a similar angle to the antitrust lawsuit filed by the attorney generals as highlighted earlier. While these lawsuits have one thing in common, that is, the acquisition of Whatsapp and Instagram, the FTC lawsuit will be pursued at the Federal level.

The move by both parties has been faulted by Facebook who confirms that it is looking into the lawsuits, and noted:

“The government now wants a do-over with no regard for the impact that precedent would have on the broader business community.”

The entire permission granted to acquire Instagram and Whatsapp was not given behind the FTC’s back who now wants a divestiture of the social media outfits from the Facebook parent company. The FTC in a bid to justify its new position said in its Q&A about the lawsuit that it has the right to pursue similar cases given the presence of justifying malpractices.

“Our enforcement action challenges more than just the acquisitions,” explains the FTC. “We are challenging a multiyear course of conduct that constituted monopolization of the personal social networking market … the FTC can – and often does – challenge consummated transactions when they violate the law.”

Facebook stock closed trading on Wednesday with a 1.93% loss to $277.92

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