What billion dollar company has a monopoly?

US lawsuit: Facebook created an illegal monopoly

The US government and 48 states are suing Facebook on allegations of unfair competition. The Federal Trade Commission (FTC) and a non-partisan alliance of states led by New York Justice Secretary Letitia James accused the company of illegally building a monopoly in their respective lawsuits.

Among other things, the takeover of the photo service Instagram in 2012 and the chat service WhatsApp in 2014 are denounced. Facebook rejected the criticism.

"Systematic strategy" through acquisitions?

The lawsuit should do nothing for employees and their teams
change, assured Facebook founder Mark Zuckerberg in his employee letter
Image: picture alliance / Marcio Jose Sanchez / AP / dpa The FTC accuses Facebook of having pursued a "systematic strategy" through such acquisitions to eliminate threats to its own monopoly. The lawsuit proposes a possible measure to force Facebook to sell individual business units. In recent years, the group has brought together the technical infrastructure behind the platform of its online network as well as Instagram and WhatsApp more closely. That would make a split technically more difficult.

New York Attorney General James said, "Facebook has used its monopoly power to crush smaller rivals and wipe out competition, all at the expense of everyday users." The lawsuit should send a clear message to Facebook and other companies: that attempts to stifle competition, hinder innovation or curtail privacy protection would be pursued with vigor.

"No purchase is ever final"

In a statement from Facebook legal counsel Jennifer Newstead, it said: "Antitrust laws exist to protect consumers and encourage innovation, not to punish successful businesses." Facebook invested billions of dollars to make Instagram and WhatsApp the products they are today. Newstead pointed out that the FTC itself had once approved the takeovers. The lawsuit now sends the signal that "no purchase is ever final".

For a long time, online heavyweights were only very loosely regulated in their home market, the USA. In the end, however, the mood changed. In October, the government and eleven states targeted Internet giant Google with a competition lawsuit. The allegation is that Google protects its dominant position in Internet search and the associated advertising in an illegal manner. The company rejected this. Legal experts doubt that the lawsuit will succeed. Among other things, it has to prove that US consumers are harmed by anti-competitive behavior on the part of Google.

WhatsApp purchase cost $ 22 billion

Facebook bought Instagram for around $ 1 billion and WhatsApp for about $ 22 billion. At the time, the takeovers did not trigger any objection from regulators in the USA - even if critics argued that Facebook had thereby incorporated competitors who could have become dangerous.

The online network counters that both services could have reached their current size, each with well over a billion users, not least thanks to Facebook's technical platform. In addition, there is still a lot of competition. Facebook founder and boss Mark Zuckerberg had also tried to buy the Snapchat photo app. However, their founders rejected the offer.

The EU Commission had also approved the WhatsApp takeover. In her case, however, Facebook later had to pay a fine because the company had made misleading information. When the takeover was announced, it was stated that it was technically not possible to merge user data. But later Facebook found a way.

Facebook founder is combative

Zuckerberg was combative in an internal message to the employees that was available to the "New York Times". "Overall, we disagree with the government's allegations and plan to fight them in court. The reality is that we compete fairly with many other services in everything we do," wrote the 36-year-old. Facebook's competitors have hundreds of millions or even billions of users, explained Zuckerberg and listed Google, Twitter, Snapchat, Apple's chat service iMessage and Google's video platform YouTube.

A few hours after the lawsuit, Facebook published an entire website intended to underpin the online network's position. The online network had time to prepare the argument: As early as May 2019, head of politics Nick Clegg published a guest article in the "New York Times" with the headline "Splitting Facebook is not a solution."

For employees and their teams nothing should change with the lawsuit, Zuckerberg assured in his employee letter. At the same time, it could take years before the process was finally concluded. "In the meantime, you should only communicate with our legal team on these cases and related matters," he cautioned staff.

Anonymity lowers the inhibition threshold for cyberbullying, harassment, insults and hate speech. This is how the Munich Higher Regional Court sees it. For this reason, among other things, Facebook allows pseudonyms to be banned in two current rulings. You can read more on the subject in another news item.