United States FTC and 48 political subdivisions sue Facebook

[95X]

The federal government and 46 state attorneys general are suing Facebook, accusing the social media giant of using illegal tactics to maintain its dominance.

The states' lawsuit, led by New York Attorney General Letitia James, alleges that Facebook squashed potential rivals by buying up smaller competitors and closing off its platform to developers of apps it perceived as a threat. In the process, it weakened privacy protections for users of its platform, she said.

"For nearly a decade, Facebook used its dominance and monopoly power to crush smaller rivals, at the expense of users," James said in a press conference on Wednesday. "No company should have this much unchecked power over our personal information and our social interactions."

The suit is filed on behalf of 46 U.S. states, the District of Columbia and Guam. Alabama, Georgia, South Carolina and South Dakota did not join.

The Federal Trade Commission filed a parallel lawsuit Wednesday. Both suits are asking the courts to force Facebook to spin off Instagram and WhatsApp, as well as to seek government approval for future mergers.

Full article here: https://www.cbsnews.com/news/facebook-anti-trust-lawsuit-48-states-ftc/

I don't like Facebook, have no reason to like their products/services, and I simply don't have an account there. Had to have an account for a college project, where we learned we were trying to reach people who don't use Facebook. I deleted my account shortly thereafter. I'm well aware "everyone" uses Facebook, sometimes without knowing it, because of how the internet works.

With that said, I think the reason Facebook and its subordinate services Instagram and Whatsapp are so dominant are because they became popular. The US Government tried to break up big tech before, and wasn't successful. Some may point to the successful breakup of the original AT&T in 1984, however that was over a vastly different means of communication in a vastly different time.

One could also argue that there is competition to Facebook, the overall populace just has to be willing to find and use it. The existence of Facebook doesn't seem to have affected the creation and/or use of other online services such as Discord, Linkedin, Skype, Telegram, Tiktok, Twitter, Google-related services, etc. If anything, the government could be using its time and resources to promote other services, and/or announce the creation of "GovernmentBook" or whatever it wants to call its service.

An even crazier take would be if Facebook counter-sued the states and federal government for frivolity or whatever and seeked monetary damages in the form of higher taxes on the overall populace to avoid further strapping government services.

Overall, if one doesn't like Facebook, just don't sign up for an account there.

Anyone else's thoughts on this?

[Galloism]

Burn them to the ground.

[Senkaku]

God bless. Hopefully they pull it apart at the joints and scatter its limbs across the steppe.

[Farnhamia]

Make Facebook break up into state-level entities, which may not have contact. That should do it.

[Eukaryotic Cells]

Facebook has a big network effect operating in its favor. Since so many people are on Facebook, it is a good way to reconnect with friends or family.

I think that's the main reason they've been able to maintain their dominant market share.

The other thing to consider with Facebook is that it has one of the highest average revenue per user (ARPU) figures out of any social media platform. They have access to a lot of data and know how to monetize that data.

[Atheris]

Raze and burn.

[Nanatsu no Tsuki]

Facebook has a big network effect operating in its favor. Since so many people are on Facebook, it is a good way to reconnect with friends or family.

I think that's the main reason they've been able to maintain their dominant market share.

The other thing to consider with Facebook is that it has one of the highest average revenue per user (ARPU) figures out of any social media platform. They have access to a lot of data and know how to monetize that data.

That’s pretty much what I use FB for.

[Ethel mermania]

I am not sure how facebooks monopoly creates more expense for its users, unless we are defining users as the advertisers.

[Valrifell]

I am not sure how facebooks monopoly creates more expense for its users, unless we are defining users as the advertisers.

The monopoly allows Facebook to get away with things that most people would otherwise find distasteful and jump to other platforms for. Like mass data harvesting.

If you don't like that happening on Facebook, where are you going to go? Instagram?

[Ethel mermania]

I am not sure how facebooks monopoly creates more expense for its users, unless we are defining users as the advertisers.

The monopoly allows Facebook to get away with things that most people would otherwise find distasteful and jump to other platforms for. Like mass data harvesting.

If you don't like that happening on Facebook, where are you going to go? Instagram?

Every platform does that, google, amazon, etc. Its like a pig farm. If the food is free, you are the product. As an aside people hated the targeted ads, the users are the only thing they have to monetize.

[Kowani]

Source 1
Source 2
FTC Filing

U.S. antitrust officials and a coalition of a states sued Facebook for allegedly abusing its dominance to crush competition, the second time in less than two months the government has brought a monopoly case against an American technology giant.

The Federal Trade Commission and state attorneys general led by New York filed antitrust complaints against Facebook Wednesday, alleging conduct that thwarted competition from rivals in order to protect its monopoly. The FTC lawsuit seeks a court order unwinding Facebook’s acquisition of Instagram and WhatsApp.

The case represents the biggest regulatory attack against Facebook in the company’s history. If the FTC and the states are ultimately successful in proving Facebook violated antitrust laws, a judge could order the breakup of the company, including separating its main social media platform from Instagram and WhatsApp. Facebok shares fell as much as 3.7% on the news.

“Personal social networking is central to the lives of millions of Americans,” said Ian Conner, Director of the FTC’s Bureau of Competition. “Facebook’s actions to entrench and maintain its monopoly deny consumers the benefits of competition. Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive.”

Facebook has squashed or hindered what the company saw as potential threats, said New York Attorney General Lettitia James during an online press conference.

Facebook used “vast amounts of money” to acquire companies that could potentially threaten it’s dominance, particularly Instagram and WhatsApp, she said. The effort was meant to “squeeze every bit of oxygen out of the room.” Facebook became a prime target for President Donald Trump in the last two months of his administration. Last week, he threatened to veto the annual U.S. defense authorization bill unless Congress adds a rider to abolish the law that protects technology companies, including Facebook, from liability over most content posted by users. The demand followed months of attacks by Trump and other Republicans, who claim the technology platforms suppress conservative views.

Facebook and its tech peers are facing a groundswell of bipartisan antagonism over their control of digital commerce and their ability to influence what users watch and read.

The Facebook case comes on the heels of the Justice Department’s October complaint against Alphabet’s Google for allegedly abusing its monopoly in internet search by using exclusive distribution agreements with phone manufacturers to lock out competitors from the market. Together, the Google and Facebook actions mark the most significant monopoly cases filed in the U.S. since the Justice Department sued Microsoft Corp. in 1998. It will be up to Biden’s Justice Department to carry the Google case forward, while the Facebook case will fall to whomever Biden picks as FTC chairman if Joe Simons, who was appointed by Trump, leaves the agency.

The investigations into the companies began in the summer of 2019 after the FTC and the Justice Department agreed on a plan to divide up scrutiny of Facebook, Google, Amazon.com Inc. and Apple Inc. A House report released in October following a 16-month investigation determined the four companies are abusing their market power as gatekeepers over the digital economy.

Their dominance is showing no signs of letting up. At the end of October, Facebook reported better-than-projected sales in the third quarter of $21.5 billion. The results showed that an advertising boycott over the summer had little impact and that Facebook remains the primary place for small and medium-sized business owners to reach customers.

The FTC said Facebook violated antitrust laws by buying Instagram in 2012 and WhatsApp in 2014, two acquisitions that the agency said were intended to eliminate emerging competition against the company. The FTC investigated and approved both deals when they were announced. According to the House antitrust report, Facebook Chief Executive Officer Mark Zuckerberg said in a message to a colleague that “Instagram can hurt us meaningfully without becoming a huge business.” When Facebook’s chief financial officer asked if the goal of buying Instagram was to “neutralize a potential competitor,” Zuckerberg responded that was a motivation for the deal.


Facebook has long denied it’s a threat to competition. Zuckerberg told Congress in July that the company faces intense competition around the world and is constantly innovating to develop products users will like and to avoid falling behind.

Instagram’s success was far from guaranteed, he told lawmakers. It was Facebook’s investments in the company that made it successful, he said.

“With hindsight it probably looks like obvious that Instagram would have reached the scale that it has today, but at the time it was far from obvious,” he told Representative Jerrold Nadler, the New York Democrat who chairs the Judiciary Committee. “This has been an American success story.”

The Facebook complaint is the most significant antitrust action under Simons’s tenure since he took over the agency in 2018. Last year, Simons reached a $5 billion settlement with Facebook for privacy infractions, an agreement that was widely criticized by privacy advocates, Democratic lawmakers and the agency’s two Democratic commissioners for not securing changes in the way Facebook operates.

The FTC is taking on Facebook just as it’s coming off a stinging loss in a monopoly case brought against Qualcomm Inc. A federal appeals court in August ruled in favor of the chipmaker and reversed a lower-court decision that the company abused its dominant position in the market for cellphone chips.

Facebook’s chief executive Mark Zuckerberg told his staff last October he would “go to the mat and fight” if the US tried to break up his empire. Now the wrestling match has begun.

On Wednesday the Federal Trade Commission, and a group of 48 US attorneys-general, hit Facebook with its first antitrust charges on home soil.

Citing scores of internal emails, the two lawsuits allege that Facebook has defended its social media monopoly for years with a “buy or bury” approach to its rivals, such as Instagram and WhatsApp.

If the FTC and the state attorneys-general can convince the courts that Facebook’s allegedly anti-competitive behaviour has damaged the market, the default solution is nothing short of the dismantling of the company.

“We currently expect that [the remedy] will include divestiture of Instagram and WhatsApp,” the FTC said on Wednesday.

“The FTC is all-in on the pursuit of the break-up. I think it is fully committed,” said William Kovacic, a former FTC chairman and a current law professor at George Washington University. 

Joel Mitnick, a partner specialising in antitrust at law firm Cadwalader, Wickersham & Taft, said: “They are saying to the court that anything short of a really dramatic restructure is not going to cure the anti-competitive effects here. It’s kind of an all-or-nothing roll of the dice.”

To illustrate Facebook’s allegedly anti-competitive behaviour, both cases focus on Facebook’s acquisitions of Instagram in 2012 for $1bn and WhatsApp in 2014 for $19bn, cast by the complainants as a bid to neutralise potential threats.

In its filing, the FTC repeatedly cites as evidence an internal email sent by Mr Zuckerberg in 2008 in which he says “it is better to buy than compete”. 

In 2012, an email from Mr Zuckerberg acknowledged that WhatsApp is “legitimately a better product for mobile messaging than even our standalone Messenger app” and that “[u]nfortunately for us, I don’t think there’s any way to directly minimise the advantage which is their momentum and growth rate”.

After buying WhatsApp, emails then showed Facebook employees celebrating the acquisition of “probably the only company which could have grown into the next FB purely on mobile”.

In another illustration of Facebook’s allegedly anti-competitive behaviour, both the FTC and the state attorneys-general charge that it squashed rivals by first allowing access to its data and platform, and then removing access to anyone it saw as a threat.

The lawsuit from the state attorneys-general listed seven apps, including Vine, Path and Circle, that Facebook had cut off from its platform “without a legitimate business justification”.

The state attorneys, led by New York’s Letitia James, also argued that Facebook had hurt its users, even while providing free services, by forcing them to surrender more of their privacy than they might have done if there had been more competition.

This argument had been advanced in recent years by several academics, including Lina Khan of Columbia Law School, who helped write the recent influential report on antitrust in the technology industry for the House of Representatives’ antitrust subcommittee.

Ms Khan tweeted on Wednesday: “States' complaint also reveals a sophisticated understanding of harms. It notes FB entered [the] market by competing on privacy but degraded privacy once it had eliminated rivals [and] secured a safe monopoly position.”

Facebook promised to defend itself “vigorously”. In previous cases testing the Sherman act, the courts have recognised that monopolies are not unlawful if they are the result of superior skill. “The successful competitor, having been urged to compete, must not be turned upon when he wins,” ruled the judge in a 1945 case regarding Alcoa.

In a statement on Wednesday, Facebook’s general counsel Jennifer Newstead noted that the deals for both Instagram and WhatsApp had been cleared by regulators at the time, and accused the government of wanting “a do-over”.

She argued that the success of both Instagram and WhatsApp should be credited to Facebook. “The Instagram you see today is the Instagram that Facebook built, not the app it acquired. When Facebook bought Instagram, it had about 2% of the users it has today, just 13 employees, no revenue and virtually no infrastructure of its own,” she said, while pointing to the fierce competition that Facebook faces from Apple, Google, Twitter, Snap, Amazon, TikTok and Microsoft.

Still, some argue Facebook has a difficult defence. It must on the one hand prove that it would have been able to achieve its success in those areas even without those acquisitions, and at the same time explain why it paid such hefty fees for both companies.

“This case throws up a lot of interesting legal questions,” said Doug Melamed, a law professor at Stanford and one of the lawyers who brought a 1998 antitrust case against Microsoft. “It looks on the face of it to be a pretty strong case, and certainly a more important one than the US case against Google.”

In pushing for a break-up, the FTC has gone further than the Justice department’s similar case against Google in October, which did not mention any specific remedies it was seeking.

The Facebook action also differs in other ways from that being brought against Google. In focusing on Google’s partnership deals with other technology companies, which the DoJ said harmed competition, lawyers were leaning heavily on arguments already explored in the case against Microsoft 20 years ago.

But by focusing on mergers — especially ones it previously approved under the Obama administration — the FTC will have to prove a complex case, arguing that Facebook would not have been able to achieve its market power in photo sharing and messaging without buying Instagram and WhatsApp.

Others argue that a break-up would disrupt Facebook’s services for users, and also hurt US competitiveness more broadly.

“Companies and investors are going to lose faith in regulators if policymakers want to reverse course on prior decisions and call a mulligan this late in the game,” said Robert Atkinson, president of Information Technology and Innovation Foundation, a non-partisan think-tank.

However, the former FTC chairman Mr Kovacic said the Biden administration would probably feel extra pressure to aggressively pursue the case as a way of rebuilding its reputation after Big Tech had grown so powerful during the Obama era. 

“To retreat from [seeking a divestiture] would be such an obvious betrayal of the evident purpose of the lawsuit . . . that if you're seen as backing off, wobbling at the knees, you lose your institutional legitimacy,” he said. “The break-up possibility is genuine and feasible.

And so comes an opening salvo in a war over both the Monopoly Age and the Speech Platforms.

NSG, do you think these suits have a shot? And is this something necessary?
And moving forward, what sort of position do you take on large corporations like this and their outsized impact on the public sphere and percetion?

[Valrifell]

Awkward.

My opinion remains the same, however. Big Tech needs to be shattered.

[Kowani]

lemme just ask the mods to merge these

[Ethel mermania]

To add a little more meat to the topic.

https://www.techdirt.com/articles/20201 ... book.shtml

[Genivaria]

I don't know enough about any specific tactics Facebook uses to say but I wouldn't be surprised honestly and I generally oppose monopolies on principle.

[Galloism]

I don't know enough about any specific tactics Facebook uses to say but I wouldn't be surprised honestly and I generally oppose monopolies on principle.

I oppose any monopolies I don't control.

*nods sagely*

[Genivaria]

I don't know enough about any specific tactics Facebook uses to say but I wouldn't be surprised honestly and I generally oppose monopolies on principle.

I oppose any monopolies I don't control.

*nods sagely*

Don't be silly Vader you don't control any monopolies, PALPATINE controls the monopolies.

[Ethel mermania]

I don't know enough about any specific tactics Facebook uses to say but I wouldn't be surprised honestly and I generally oppose monopolies on principle.

I oppose any monopolies I don't control.

*nods sagely*

Me too.

[-Astoria-]

Good.

[Kowani]

Facebook offered to help another company build a rival social network to fight off antitrust lawsuit

[Ethel mermania]

Facebook offered to help another company build a rival social network to fight off antitrust lawsuit

Microsoft did the same with apple

https://appleinsider.com/articles/18/08 ... made-peace

[Punished UMN]

Consumers: "Ugh, I wish companies would work to streamline their operation and make things more convenient to use."
Businesses: *form monopolies*
Consumers: "No, not like that."

[Greed and Death]

This is dumb. The whole point of social media is everyone is there. Of course the best one is going to end up becoming a monopoly. the only winners from this are the weirdos on Parlor.

[Page]

I'll repeat my usual line on this subject: I don't trust Zuckerberg as far as I can throw an elephant, but I trust the government even less than that. I don't think there is any good outcome. There are horrifying consequences of corporations like Facebook running wild and there are horrifying consequences of the government controlling social media. Whatever happens, regular people lose.