U.S. Government, Most States Seek to Break Up Facebook

Posted on December 9, 2020 by Paul Thurrott in Social with 37 Comments

The Federal Trade Commission (FTC), 46 states, the District of Columbia, and Guam have joined forces to accuse Facebook of antitrust violations. And they want the most severe of penalties: To break up the social media giant.

“Personal social networking is central to the lives of millions of Americans,” FTC director Ian Conner said of the massive antitrust lawsuit. “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.”

By “roll back,” Mr. Conner means that the FTC is seeking to break up Facebook by requiring it to sever itself from two of its biggest acquisitions, Instagram and WhatsApp. It also would prohibit Facebook from “imposing anticompetitive conditions on software developers” and require the firm to seek “prior notice and approval for future mergers and acquisitions.”

According to the complaint, Facebook has engaged in a systematic strategy to eliminate competition and extend its social media monopoly by acquiring companies that threaten it. This behavior, the complaint alleges, “harms competition, leaves consumers with few choices for personal social networking, and deprives advertisers of the benefits of competition.”

“We’re reviewing the complaints and will have more to say soon,” Facebook tweeted of the lawsuit. “Years after the FTC cleared our acquisitions, the government now wants a do-over with no regard for the impact that precedent would have on the broader business community or the people who choose our products every day.”

The antitrust lawsuit comes after what the FTC said was a lengthy investigation of Facebook by the agency in close cooperation with a coalition of attorneys general under the coordination of the New York State Attorney General.

You can view the full complaint here.

Tagged with ,

Join the discussion!

BECOME A THURROTT MEMBER:

Don't have a login but want to join the conversation? Become a Thurrott Premium or Basic User to participate

Register
Comments (38)

38 responses to “U.S. Government, Most States Seek to Break Up Facebook”

  1. Avatar

    LT1 Z51

    About time. Facebook should never have been allowed to gobble up WhatsApp and Instagram.

  2. Avatar

    sammyg

    I hope so. We so badly need privacy laws in the US. GDRP on steroids for the US.


    Until then these companies are going to suck every bit of information out of us and use it to manipulate us in many ways. They have no problem going in front of congress and saying sorry while every second they are in front of the camera gigabytes of information is being collected.


    Break them up or tens of billions worth of fines are in order. Make it hurt.

  3. Avatar

    Jorge Garcia

    In reply to sammyg:

    There are a lot people living in Malibu who argue that it is unsafe to allow non-residents to use use the (public) beach adjacent to their homes. A valid desire, but not legal. I'd also bet there a re a ton of people in the Hamptons who wish that ALL the roads could be used only by residents (for "safety"). Again, a valid desire, but not legal. I personally feel that communication is too basic to be "cornered" by one company. Other components of the ecosystem, sure. I'll stop beating this dead horse.

  4. Avatar

    Jorge Garcia

    In reply to RM:

    I absolutely agree and "get it", but I think the market share argument unfortunately does provide them a pretty big shield in court because the argument you're making, while correct is a little tough to wrap your head around if you're say, a juror. I hope the courts do "get it" eventually though.

  5. Avatar

    Jorge Garcia

    In reply to lvthunder:

    But I don't think most humans continue to have that expectation. Video calling and messenger services are FAR more ubiquitous now than SMS, especially among the young ones. Plus Apple goes out of its way to "humiliate" you if you are using SMS (Green bubble). Of course grown people shouldn't care about things like that, but a lot do, and they sell a lot of products via that type of FOMO/intimidation and I think that's pretty anticonsumer.

  6. Avatar

    crunchyfrog

    Hey, here's a great idea for the leftist's; let's make a new law that companies can't have more than 100 employees. That should solve everything.

    • Avatar

      Jorge Garcia

      In reply to crunchyfrog:

      This debate greatly transcends Right/Left. I am a Cuban ex-pat whose entire family lost it all to Castro, so you'll struggle to find a more conservative fellow than I, yet I am wholly for breaking up "Big Tech" and regulating/watchdogging the heck out of them. These companies, besides having almost unlimited wealth, now have propaganda POWERS that STATES could only dream of having in the past. Just imagine if the "leanings" of the 3-4 Social Media giants happen to coincide perfectly with the "leanings" of the current elected state officials...censorship is then just a few lines of code away and it becomes laughably easy to brainwash people or at least bend opinions. It's well known that no one turns on the regular news anymore.

  7. Avatar

    crunchyfrog

    Break up Facebook, why, what's the point? Breaking up a turd into smaller turds still does not eliminate the stink that social media creates.

  8. Avatar

    nine54

    In reply to lvthunder:


    I agree, but a case could be made that iMessage is an independent service, just like other Apple services, such as Apple Music Apple TV+, etc. Apple allows these other services to be accessed by non-Apple software and hardware, so why not iMessage?

  9. Avatar

    garumphul

    I don't see how breaking them up fixes any of the things that are (in my opinion) wrong with Facebook.

    Those acquisitions were examined at the time and both were approved - probably in the EU too. I tend to agree with FB's statement that having a do-over is an extremely bad message to send.

    Regulating what ALL internet companies are allowed to collect, store and share about their users is better than penalizing a few prominent examples.

  10. Avatar

    wright_is

    In reply to lvthunder:

    Two wrongs don't make a right.

    Just because they didn't look closely at it and didn't foresee where it would lead, doesn't mean that there isn't a problem with how Facebook behaves now.

    • Avatar

      nine54

      In reply to wright_is:


      While I have no sympathies for FB, I tend to agree.


      In an effort to preserve its monopoly in the provision of personal social networking, Facebook has, for many years, continued to engage in a course of anticompetitive conduct with the aim of suppressing, neutralizing, and deterring serious competitive threats to Facebook Blue. This course of conduct has had three main elements: acquiring Instagram, acquiring WhatsApp, and the anticompetitive conditioning of access to its platform to suppress competition.


      As others noted, the IG and WA acquisitions were reviewed and approved. Of course it's difficult to build a competitive social network due to a high barrier of entry, which is partly why FB pursued these acquisitions. These difficulties along with the significant advantages of being an incumbent would have been potential reasons to block these acquisitions. But unless the complainants can demonstrate how FB is unfairly using these acquired products to expand its monopoly power and stifle competition, then this just feels like a request for a mulligan.


      The only pillar in the lawsuit that seems to have teeth is the final piece on "anticompetitive conditioning" of platform access. This refers to granting third-parties the right to use APIs only if they agree not to offer products that compete with existing FB products or capabilities, such as chat and photo-sharing. But the lawsuit notes that these restrictions have been scaled back or suspended based on international regulatory pressure. However, this may warrant additional scrutiny.

  11. Avatar

    Jorge Garcia

    In reply to lvthunder:

    Anti-Trust laws. Haven't you ever met anyone say they'd like to switch platforms but they would have a very hard time talking to grandma because she only has an iPad so it would be like digitally abandoning her? I know of so many people who feel this way (not me personally I use Android). It's perfectly OK to have proprietary software built into SPECIALIZED things like game consoles for example. No consumer is expecting to be able to play a PS5 or Nintendo game on an XBox. But imessage and facetime have now become tantamount to BASIC communication that many. many average consumers simply "assume" is standardized like SMS is. Only when they "attempt" to switch do they find out all their friends and family will be on the other side of a digital wall if they do. That is the kind of nasty, anti-consumer BS that our anti-trust laws exist for.

  12. Avatar

    anoldamigauser

    In reply to lvthunder:

    Yep. I am not sure that the regulators actually know how to judge these things at this point.

    No one is looking at the real issue which is data collection and advertising, you know, how they make money. They are looking at it as though "personal social media" is the product these companies provide.

    Unless, of course, this is a crafty way to increase competition in the online advertising business.

  13. Avatar

    Nic

    *grab the popcorn bowl*

  14. Avatar

    jdawgnoonan

    I cannot say that I feel sympathy for Facebook.

  15. Avatar

    shark47

    The funny thing is Apple, Google, and Amazon all engage in behaviors that abuse their market positions.

    • Avatar

      Jorge Garcia

      In reply to shark47:

      YouTube (and the inextricably connected) YouTube Music should be forced to be a separate company from Google itself IMO. Too much concentrated power. Google knows everything about you and YouTube has the ability to pump algorithmically generated Propaganda straight into your eyeballs. Too much power.

    • Avatar

      sammyg

      In reply to shark47:

      I doubt Apple will be hit hard if at all. Apple has stayed out of specific types of business the others have dominated in. Smart move by them.

      • Avatar

        Jorge Garcia

        In reply to sammyg:

        Apple is most likely "safe" because of market share, but the way they made imessage and facetime proprietary to essentially trap unsuspecting consumers (who are simply trying to communicate with friends and family - not perform any specialized activity) inside the Apple ecosystem - is undeniably illegal in my book. I compare it to automobiles: You and your folks have bought Chevy's for 100 years, and one day, Chevy rubs you the you the wrong way and you decide to buy a Ford instead. There is absolutely no detriment to you as a consumer for making this move. You can stll drive on the same roads, use the same mechanic and your ability to drive alongside your Chevy-driving family members is not altered. But in the smartphone world, it's very different (thanks to Apple). There is large swath of normal people who simply cannot stomach the friction/shame of NOT having imessage and facetime installed. Even if they might want to explore other smartphone options, they can't do so without taking a big hit to their social life. It's nasty, anticompetitive behavior and therefore illegal IMHO.

    • Avatar

      red.radar

      In reply to shark47:

      Hold your horses their turn is coming

  16. Avatar

    rossdelliott

    Which states did not join in?

  17. Avatar

    nbplopes

    In reply to sammyg:


    The issue of these companies is not regarding a specific feature, rather than a collection of practices embedded in their products that together with their market share gives them an edge over any other that is extremely difficult to over come to the point where competition through innovation is irrelevant. Without innovation people will not get better products and services and be stuck on a loop of marginal development year over year and maximum profits ... more or less what happens with Windows.

Leave a Reply