Facebook monopoly threatened by US authorities

Facebook monopoly threatened by US authorities

The Federal Trade Commission (FTC) and a coalition of 46 US states accuse Facebook of an illegal monopoly.

Why are the American authorities filing a complaint against Facebook?

The FTC (Federal Trade Commission) and a coalition of attorneys general from 46 US states have conducted a major investigation into the practices of the social network. Following this investigation, they decided to file a complaint against Facebook for illegal monopoly.

FACEBOOK’S ACTIONS TO CONSOLIDATE AND MAINTAIN ITS MONOPOLY DEPRIVE CONSUMERS OF THE BENEFITS OF COMPETITION. OUR GOAL IS TO REVERSE FACEBOOK’S ANTI-COMPETITIVE BEHAVIOR AND RESTORE COMPETITION SO THAT INNOVATION AND OPEN COMPETITION CAN FLOURISH, SAYS IAN CONNER, DIRECTOR OF THE FTC’S COMPETITION BUREAU.

The American authorities consider the acquisitions of Instagram and WhatsApp by Facebook as anti-competitive, and also consider certain conduct of the social network as such, in particular concerning the conditions of access of third-party software developers to its platform.

FTC Highlights Facebook’s Unparalleled Position in Social Networking and Associated Messaging Services Market, Revealing Significant Company Profits: Over $ 70 Billion in Revenue and Over $ 18.5 Billion in Profits Last year.

Why would these acquisitions be anti-competitive?

“According to the FTC complaint, Facebook has targeted potential competitive threats for its dominance. “ The US authorities accuse Facebook of having made acquisitions Instagram and WhatsApp for the sole purpose of keeping their monopoly power.

  • For Instagram: Facebook would initially have tried to compete with Instagram but would ultimately have chosen to buy it for $ 1 billion in 2012, in order to neutralize as soon as possible any direct threat of competition.
  • For WhatsApp: Facebook executives reportedly saw the mobile messaging app as an emerging threat, which is why they reportedly decided to acquire the app for $ 19 billion in 2014 rather than directly compete with it.

What anti-competitive conduct towards software developers?

In addition, the FTC complains about Facebook’s actions towards third-party software developers: “Facebook would have made API keys available to third-party applications only on condition that they refrain from developing competing features, and connect with or promote other social networking services ”.

Regarding this subject, Facebook defends itself, explaining that some applications just wanted to copy its already existing services, which is why restrictions were imposed: “some applications have used our platform not to improve the experience of Facebook users but to unfairly duplicate the services already provided by Facebook ”. 

Facebook could be forced to separate from Instagram and WhatsApp

The unprecedented threat could have serious consequences. Indeed, the FTC’s complaint in federal court could first of all force Facebook to separate from Instagram and WhatsApp, which would have a painful impact on the company, since these two applications are essential for the group’s growth.

In the future, Facebook may also be required to seek advance notice and approval for mergers and acquisitions it wishes to undertake. Finally, the federal court could consider prohibiting certain conditions Facebook deemed anti-competitive for third-party software developers.

Facebook calls prosecution “revisionist”

Facebook sees the accusation as a ”  revisionist story” because the acquisitions had already been reviewed by the relevant antitrust regulatory authorities and were not challenged at the time. Facebook defends itself, explaining that they face competition: “we compete for advertising revenue with other digital platforms, from Google to TikTok, and with other channels such as television, radio and the written press ”.

The social network also believes that the US authorities have a skewed view of the reality of the market, ”  the companies choose us because our applications and services offer real value. Unfortunately, these lawsuits do not understand the advertising landscape and instead offer a distorted view of how advertisers spend to reach their target audience ”.

According to Facebook, there is therefore no illegal monopoly, their success depends above all on risky bets and innovation. Like Google attacked for abuse of a dominant position , Mark Zuckerberg’s social network will also have to defend itself in court.

Also Read: Facebook business page: 12 tips for more Success

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