On Wednesday, New York Attorney General Letitia James announced a massive antitrust lawsuit against Facebook, claiming the social network has hurt competition by buying up smaller companies like Instagram and Whatsapp. Forty-seven other state and regional attorneys general agree with the lawsuit.
The lawsuit focuses on exmarkets of Facebook, notably the $1 billion purchase of Instagram in 2011. In addition to the acquisition strategy, the attorneys general allege that Facebook used the power and reach of its platform to limit user growth on competing services.
"For almost a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and eliminate competition," James told a news conference.
“Facebook used huge sums of money to acquire potential rivals before they threatened its dominance companyς ”.
The Federal Trade Commission filed a separate lawsuit against Facebook for similar reasons, which was announced at the same time as the lawsuit. The FTC case explicitly asks the court to break the dominance of the social network, dividing the Instagram and WhatsApp services into two independent companies.
"Our goal is to reverse Facebook's anti-competitive behavior and restore competition so that innovation and free competition thrive." said Ian Conner, Director of the FTC Competition Office.
Facebook, on the other hand, claims that both acquisitions were made in consultation with regulators and that their overthrow would be a dangerous precedent. "Years after the FTC approved our takeovers, the government now wants a change without taking into account the impact it would have on the wider business community or the people who choose our products on a daily basis," the company said.
Another aspect of the antitrust lawsuit is whether the companies' acquisition of Facebook made the product worse for consumers - especially in terms of privacy.
Facebook has long claimed that its resources and scale are responsible for turning apps like Instagram and WhatsApp into giant platforms with billions users. However, researchers are looking at how for example, its market WhatsApp from Facebook and his decision to use WhatsApp user data later may have harmed consumers and ruined competitors 'competition by exploiting users' privacy.