A lawsuit has been filed against Facebook for its practices that hindered competition in an anti-trust offensive by the US government in collaboration with 48 states and districts.
The charge against Facebook is that they control too much of the social media industry and have gotten rid of competitors through various shady means. They are also actively making it difficult for other companies to have access to the market or have considerable market share.
This lawsuit, which includes almost all states of the US, is championed by Letitia James, New York’s attorney general.
She has reportedly explained that Facebook is guilty of suppressing smaller competition and rivals by abusing its market power and using its control over the industry. She believes that due to these illegal practices, users and small businesses are being hurt.
NY AG's office just announced an antitrust lawsuit against Facebook. pic.twitter.com/ffoy0oylMe
— Queenie Wong (@QWongSJ) December 9, 2020
She further proceeds to say that the social media giant is squashing competition instead of competing on merit and they intend to use the personal data they gain from these acquisitions to convert it into a cash cow.
The US Federal Trade Commission (FTC) was also involved in the investigation conducted by the attorney general, which lasted for an entire year. The FTC has also filed another lawsuit accusing Facebook of devising a strategy to implement their anti-competitive schemes.
If the commission is successful with this lawsuit, Facebook would be forced to sell off its recent acquisitions: Instagram and WhatsApp.
The director of FTC’s bureau of competition spoke on the matter, saying that if Facebook continues with its anti-competitive scheme, it will hinder innovation and the benefits that come with free competition.
According to the FTC, Facebook also has a monopoly in the social media market because it has control over the biggest social media companies globally which include Facebook, Facebook Messenger, Instagram, and WhatsApp. In 2019 only, the company gained revenue of $70bn and profits of more than $18.5bn.
Facebook’s defense is that the FTC had previously approved its acquisition of the two companies. Moreover, the vice-president of Facebook has argued that their company’s free services and advertising provide numerous benefits to consumers and small businesses.
She also objected that this is unfair to American businesses as the government itself had authorized the acquisition and now it has objections over it.
Facebook has also acquired Giphy earlier this year and is now intending to take over an e-commerce app called Customer.