Facebook is facing two lawsuits which accuse it of abusing its power and demand it sell off both Instagram and WhatsApp.
In two separate cases, US federal regulators and 48 states and districts are seeking remedies for Facebook for allegedly employing a ‘systematic strategy’ to eliminate its competition.
The Federal Trade Commission (FTC) is seeking a permanent injunction that would require Facebook to divest assets, including Instagram and WhatsApp. The statesy, spearheaded by New York Attorney General Letitia James, are also calling for the company to be broken up, if necessary.
Ms James said during a press conference today: ‘It’s really critically important that we block this predatory acquisition of companies and that we restore confidence to the market.’
She also claimed the company had ‘used its monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users’.
The lawsuit – which includes 46 states, Guam and the District of Columbia – accuses Facebook of anti-competitive conduct and using its market dominance to harvest consumer data and make huge sums of money in advertising revenues.
Similarly, the FTC alleges that Facebook eliminated threats to its monopoly, including the 2012 and 2014 acquisitions of Instagram and WhatsApp, which it had previously cleared. It said the company engaged in a ‘systematic strategy’, leaving it with a monopoly power in the US personal networking market.
Facebook is currently the world’s biggest social network, with more than 2.7 billion users and a market value of nearly $800 billion. CEO Mark Zuckerberg is the world’s fifth-richest person.
The company acquired Instagram for $1 billion and WhatsApp for $19 billion. Before Instagram’s purchase, it had about 30 million users and was not producing any revenue.
Mr Zuckerberg vowed both companies would be run independently, but over the years the services have become increasingly integrated. Users are now able to link accounts and share content across the platforms.
Facebook’s general counsel Jennifer Newstead has since blasted the legal action, telling the Daily Mail it was ‘revisionist history.’
She said: ‘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.’
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