Facebook Faces Significant Legal Action From US Government

U.S. government officials and more than 45 State prosecutors have sued Facebook, accusing the tech giant company of taking illegal measures to buy competitors and prevent/stifle competition.

These court cases are one of the most important legal actions the US government has taken against the company.

What Facebook Said?

Officials are asking the court to consider spin-off the company into units, which also has Instagram and WhatsApp.

Facebook said the deals were approved by regulators many years ago.

“The government now wants something done, to send a shocking warning to the American business community that no sales can ever take place being final,” said Facebook attorney general Jennifer Newstead.

He said the company has invested millions to make Instagram and WhatsApp successful and will protect itself “vigorously”.

“Anti-fraud laws exist to protect consumers and encourage innovation, not to punish successful businesses,” Facebook said, describing the government’s controversies as “the history of reviewers”.

The Lawsuit

The lawsuits filed by the states and the Federal Trade Commission (FTC) focused on the acquisition of Facebook in 2012, the acquisition of WhatsApp in 2014 and the rules governing external software developers.

Officials accuse Facebook of taking a “buy or bury” approach to potential rivals, harming competitors and users, who have lost their information to fund the advertising company.

These official themes feature internal messages from Facebook manager Mark Zuckerberg, such as one 2008 email saying “it’s better to buy than to compete”.

“For almost a decade, Facebook has used its power to dominate and eliminate small rivals and eliminate competition, all for the daily use of users,” said New York Attorney General Letitia James, who is leading the legal battle by the provinces.

“No company should have so much control over our communication and communication. That’s why we are taking action today.”

Facebook’s Acquisitions

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It’s hard sometimes to understand how great Facebook is.

Facebook, Facebook Messenger, WhatsApp and Instagram – all belonging to Facebook – all have more than a billion users a month.

WhatsApp and Facebook have over two billion.

The Federal Trade Commission’s (FTC) claims that there is a reason why Facebook will dominate this lucrative industry – it has won the competition illegally.

In 2012 Instagram was growing rapidly. Facebook was worried.

Zuckerberg had previously admitted that Instagram was competing with Facebook.

It was purchased, because it now appears to be an astonishing minimum of $ 1bn.

WhatsApp also in 2014 was growing at an astonishing rate. Would it threaten the Facebook messenger service itself?

Facebook also buys WhatsApp.

Both of these purchases were previously considered by the FTC and approved.

That’s Facebook’s argument – that they bought these companies when they were so young – that nothing was predestined for their success. In other words, don’t punish Facebook for building strong American companies.

Whether Instagram and WhatsApp will be disconnected from Facebook will now be decided in the courts – and these anti-trust cases are taking time.

There will be ample opportunity for complaints. Don’t expect a Facebook break soon.

But this further indicates the whereabouts of the courts and politicians.

Big Tech is too small in the eyes of most people – and needs to be reduced in size.

Monopoly Claims

The lawsuit comes as American regulators are scrutinizing the power enjoyed by technology companies.

This summer, executives Google, Amazon, Facebook and Apple were forced to testify before Congress, as part of a larger investigation into their market influence.

In October, the Justice Department filed a lawsuit against Google, accusing a major search company of violating US competition laws in order to maintain universal control over online search and online advertising.

More than 2.5 billion people use one of Facebook’s apps every day. The firm, valued at about $ 800bn, employs more than 56,000 people and reported more than $ 18bn in profits last year.

The Open Markets Institute, a Washington think tank that has been urging regulators to take drastic action against technology companies, said the cases were a “critical step” forward.

“There is still much to be done, but this is a great time,” the organization wrote on Twitter.

Shaheer Ansari

Shaheer is passionate about living a life seeking un-ending knowledge, philomath, as you may think of him. He's a student of Finance and a keen observer of Business and Indian-Political scenario who takes pleasure to pen down his views and opinions on the same. As his guiding mantra to life, ‘Come what may , life goes on’ helps.

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