Facebook Sued by 48 States, Federal Trade Commission Over Allegations of Monopolistic Practices

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by Delphine Luneau

 

New York Attorney General Letitia James announced Wednesday that she is leading a coalition of dozens of states to file a lawsuit against social media giant Facebook.

James, along with the attorneys general of 47 other states and the Federal Trade Commission, accuse Facebook of using its dominant market position to acquire and otherwise crush competitors, tactics that amount to monopolistic abuse that harm users.

“Facebook used its power to suppress competition so it could take advantage of users and make billions by converting personal data into a cash cow,” James said in a news release. “Almost every state in this nation has joined this bipartisan lawsuit because Facebook’s efforts to dominate the market were as illegal as they were harmful.”

Filed in the U.S. District Court for the District of Columbia, the lawsuit asks the court to restrict Facebook from making acquisitions of other companies valued at more than $10 million without advance approval from the states. It also asks the court for “additional relief it determines is appropriate, including the divestiture or restructuring of illegally acquired companies, or current Facebook assets or business lines.”

Facebook, in a statement posted to Twitter, argued that all of its acquisitions had already been subject to government review.

“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 company wrote.

The news release from James’ office alleges that the company violated the Sherman Antitrust Act and the Clayton Act through its purchases of rival companies, including Instagram and WhatsApp.

“Facebook targets competitors with a ‘buy or bury’ approach: if they refuse to be bought out, Facebook tries to squeeze every bit of oxygen out of the room for these companies,” the news release stated. “To facilitate this goal, Facebook has used an “open first–closed later” strategy to stop competitive threats, or deter them from competing, at the inception.”

The latter strategy consisted of opening the platform to outside companies, the attorney general alleged, only to revoke that open access without warning after the third-party companies had become dependent on the revenue they were receiving, putting their businesses in jeopardy.

“As a consequence of Facebook’s expansive user base and the vast trove of data it collects from its users and users’ connections, Facebook is able to sell highly targeted advertising that firms greatly value,“ the news release stated. “The volume, velocity, and variety of Facebook’s user data give it an unprecedented, virtually 360-degree view of users and their contacts, interests, preferences, and activities.”

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Delphine Luneau is a veteran journalist with more than 20 years of experience. She was the editor of Suburban Life Media when its flagship was named best weekly in Illinois, and she has worked at papers in South Carolina, Indiana, Idaho and New York. Luneau is a regional editor for The Center Square. 
Photo “Facebook Workplace” by Facebook.

 

 

 

 

 

 

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