US Government Sues Facebook, Seeks its Breakup

2 min read | December 10, 2020 12:08 PM AEDT | By Hina Chowdhary

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US Government Sues Facebook, Seeks its Breakup

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Summary

State Governments and the Federal Trade Commission are suing Facebook for monopolised market.

They have alleged that Facebook has a dominant position in the social media market, which is lacking competition.

The Federal Trade Commission (FTC) has sued Facebook on antitrust grounds. The investigation into the matter was conducted in coordination with the Attorney Generals of 46 states.

They are alleging that the social media giant has engaged in a strategy to eliminate competition, specifically with the acquisition of Instagram in 2012 and WhatsApp in 2014.

While breaking up the big tech has been on the agenda for politicians, the latest lawsuit against Facebook with 46 states indicates that institutions are hell-bent on breaking monopolies.

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FTC has also noted that such practices leave consumers with very few choices and deprives advertisers of the benefits of competition.

Facebook also imposes anticompetitive conditions on software developers to maintain its monopoly, the trade commission stated.

The authority and the states are seeking a breakup of the social media company. They are arguing for divestments of WhatsApp and Instagram while demanding for approvals of future mergers and acquisitions by Facebook.

The trade commission also wants Facebook to drop its anticompetitive conditions on software developers.

The complaint alleges that Facebook is a dominant player in the social media market, globally, and has a monopoly position. Facebook generates ‘staggering profits’ due to its monopoly in the social media market.

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With the acquisition of Instagram, the social media company suppressed a budding competitor in the industry. The transaction was also undertaken at a crucial time when the market was transitioning from a desktop to mobile-based channels.

The complaint has noted that the acquisition of WhatsApp also indicates the intentions to suppress competitive threats.

WhatsApp was a global category leader in mobile messaging. FTC has charged that Facebook again chose to buy instead of competing with WhatsApp.

It also raised questions on Facebook’s anti-competitive conditions on third-party developers. Among other things, the company refrains third-party developers from developing competing functionalities.

Also Read: Monopolistic Competition

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