(TNS) —
New York Attorney General
Letitia James
and the attorneys general from 47 other states announced Wednesday they had filed a federal lawsuit against Facebook, alleging the social media giant illegally preyed on smaller rivals before they could grow large enough to compete with it.
The lawsuits seek to have a federal court force
Facebook to divest from Instagram and
WhatsApp.
James said her office is leading the litigation, and is joined by all but four states in the case. A separate lawsuit filed by the
Federal Trade Commission mirrored the allegations made against
Facebook, and James said the states and federal investigators collaborated on litigation.
The anti-trust lawsuits filed against
Facebook, and another filed in October against Google by the
U.S. Department of Justice, mark the biggest anti-monopoly actions by government agencies since Microsoft faced similar accusations in the 1990s.
Facebook brought in more than $70 billion in revenue last year, including $18.5 billion in profit. It's among the largest corporations in the world, making money by selling targeted advertising on its social media platforms based on detailed information it collects from its users.
The lawsuits focus particularly on Facebook's purchase of Instagram in 2012 for about $1 billion and its purchase of
WhatsApp in 2014 for $19 billion, which was more than other independent sources had valued the companies.
"Antitrust laws exist to protect consumers and promote innovation, not to punish successful businesses. Instagram and
WhatsApp became the incredible products they are today because
Facebook invested billions of dollars, and years of innovation and expertise, to develop new features and better experiences for the millions who enjoy those products," wrote
Jennifer Newstead
,
Facebook's vice president and general counsel, in a statement provided to the
Times Union.
In a strategy James termed "buy or bury," she said
Facebook threw money at the Instagram and
WhatsApp because they "each posed a unique and dire threat to
Facebook's monopoly" over social networking. In other cases, James said,
Facebook invited app developers to work through its larger platform, but if those developers appeared like they might someday pose a threat to
Facebook, it would quickly stomp out the smaller companies.
"They also sent a clear message to the industry, don't step on Facebook's turf. Or as one industry executive put it, 'You will face the wrath of Mark,'" she said, referring to
Facebook's founder,
Mark Zuckerberg
.
The result of decreased competition, James said, is that
Facebook has been able to spy unchecked on its users and profit off their personal information. It has dampened innovation and creativity, she said, and boxed out the possibility of growth for many other smaller social networking businesses.
"
Facebook has been spending its time surveilling its users personal information and profiting from it," James said. "No company should have this much unchecked power over our personal information and our social interactions."
The attorneys general and the
FTC are each asking the courts to force
Facebook to divest itself from Instagram and
WhatsApp, to change the way it manages web developers on its platform and to be required to seek the government's permission in the future to buy other companies.
"People and small businesses don't choose to use
Facebook's free services and advertising because they have to, they use them because our apps and services deliver the most value. We are going to vigorously defend people's ability to continue making that choice," Newstead said.
The lawsuits announced Wednesday are part of a broader, bipartisan "moment of tech lash" against major technology corporations, said
Alec Stapp
, director of technology policy at the
Progressive Policy Institute, a
Washington think tank.
There's also "animus toward
Facebook in particular," Stapp said, due to controversy over political speech on that platform in the last few years.
Facebook did have to ask for permission to acquire
WhatsApp and Instagram, Stapp noted, and if they were wrong then, it would have made more sense for the
FTC to study why they approved them so it doesn't happen in future instances.
"People like to say
Facebook has monopolized social networking, but if you just look around, look at your own phone, you'll see that's not the case," he said, pointing to the rise of
Tik Tok
as an example, a popular app to create and share short videos.
(c)2020 the Times Union (Albany, N.Y.). Distributed by Tribune Content Agency, LLC.
