FB Stock Plunges 2% as Google and Facebook Battle Government’s Antitrust Lawsuits

UTC by Daria Rud · 3 min read
FB Stock Plunges 2% as Google and Facebook Battle Government’s Antitrust Lawsuits
Photo: Depositphotos

Currently, Facebook is also facing a legal suit from the Federal Trade Commission and a coalition of 48 US states. They are accusing Facebook of engaging in anticompetitive behavior and abusing its market position to liquidate potential rivals.

Facebook Inc (NASDAQ: FB) and Google LLC (NASDAQ: GOOGL) (NASDAQ: GOOG) have teamed up to combat the government’s antitrust lawsuits. According to the Wall Street Journal, the tech giants will “cooperate and assist one another” in case of any investigation into their online advertising deal.

Last week, ten US states filed a lawsuit against Google and accused it of working with Facebook in a manner that violated antitrust law. In particular, they alleged that back in 2018, the companies signed a deal under which Facebook would not compete with Google’s online advertising tools. In return, the latter guaranteed special treatment of Facebook when using Google’s tools. According to the lawsuit, the code name of the deal was “Jedi Blue”, which has reference to Star Wars.

In addition, the filing states Google and Facebook were aware that their deal could provoke antitrust lawsuits. A person familiar with the matter said their actions included language where the companies would “cooperate and assist each other in responding to any Antitrust Action” and “promptly and fully inform the Other Party of any Governmental Communication Related to the Agreement.”

Texas Attorney General Ken Paxton, who led the suit, said:

“Google is a trillion-dollar monopoly brazenly abusing its monopolistic power, going so far as to induce senior Facebook executives to agree to a contractual scheme that undermines the heart of [the] competitive process.”

Both Google and Facebook have disputed the allegations. As per Google, the agreements over antitrust threats are common but that the “claims are inaccurate”. The giant said there was “nothing exclusive” about Facebook’s involvement”. As for Facebook, it responded by saying “any allegation that this harms competition or any suggestion of misconduct on the part of Facebook is baseless.”

Facebook in Hot Water amid Antitrust Issues

Currently, Facebook is also facing a legal suit from the Federal Trade Commission and a coalition of 48 US states. They are accusing Facebook of engaging in anticompetitive behavior and abusing its market position to liquidate potential rivals. According to watchdogs, the company has been acquiring or eliminating all of its competitors. Besides, it was applying unlawful tactics, which helped it become one of the most profitable digital services in the world.

Facebook has long been disputing the claims. Recently, its lawyers said the company even offered to help stand up its next competitor. As Washington Post reported, Facebook offered to change some of its business practices. In particular, the company offered to license its network and code to avoid antitrust action. The measure would “allow another firm or developer to license access to its powerful code – and its users’ intricate web of relationships – so that they could more easily create their own version of a social network.”

However, investigators ultimately declined this idea.

In this context, Facebook shares are tanking. On Tuesday, FB stock closed 2.09% down, at $267.09. After hours, it declined by another 0.23% to $266.48.

Business News, Market News, News, Social Media, Stocks
Daria Rud
Author Daria Rud

Daria is an economic student interested in the development of modern technologies. She is eager to know as much as possible about cryptos as she believes they can change our view on finance and the world in general.

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