Recently Facebook and the federal government have entered into the latest conflict in their longstanding feud. The tech giant is being sued by the FTC (Federal Trade Commission) and 48 attorney generals.
The lawsuits stem from Facebook having bought Instagram and WhatsApp nearly a decade ago. Essentially the government is alleging that Facebook is engaging in anti-competitive conduct, which is illegal. Facebook dominates the social media market with these two platforms and the government lawsuit would force Zuckerberg sell both of them.
After looking into the feud, there is some compelling evidence on both sides, but it appears the government may have the stronger legal claim and evidence to support it. NPR reports that there are some very incriminating emails that have been discovered amongst the executives of Facebook. The emails repeatedly use the word “threat” to describe both Instagram and WhatsApp. Rhetoric such as this is indicative of Facebook’s malicious intent; it suggests the reasoning behind the purchases came from an anti-competitive mentality. This mentality could be summed up in a quote, “it is better to buy than to compete”, Mark Zuckerberg, 2008.
Facebook claims that the reason for the success of Instagram and WhatsApp is due to the large amounts of money that Facebook has poured into each app. According to The Economist, Facebook’s legal team may go as far to argue that without their funding we could live in a world without Instagram or WhatsApp. However, that argument is an admission of anti-competitive conduct.
Facebook would have been practicing what has been termed a “buy or bury” business model.
Basically, Facebook would obliterate any apps who stand in their way of market dominance. They would use their leverage as the dominant platform to deny valuable resources from any companies who refuse to sell out. The government claims that this conduct hinders the competitive nature of our markets and must be stopped.
Facebook will also claim that a lawsuit such as this sets a bad legal precedent for the federal government. They are right. The FTC approved the purchases of both Instagram and WhatsApp back in 2012 and 2014, but now the lawsuit overturns such a decision. While this may look like the government is being two-faced, it is fair to note that social media, as a market, was very young then so the government could not have imagined how Instagram and WhatsApp would become so prominent.
However, due to the emails circulating amongst Facebook officials, and their experience with social media technology, it is reasonable to assume that they used an enhanced understanding of the social media market to capitalize on the government’s ineptitude and purchase Instagram and WhatsApp before their potential was widely realized.
Betsy Lordan, “FTC Sues Facebook for Illegal Monopolization,” Federal Trade Commission, December 9, 2020, https://www.ftc.gov/news-events/press-releases/2020/12/ftc-sues-facebook-illegal-monopolization. Shannon Bond, “'The Wrath Of Mark': 4 Takeaways From The Government's Case Against Facebook,” NPR (NPR, December 11, 2020), https://www.npr.org/2020/12/11/945234491/the-wrath-of-mark-takeaways-from-the-governments-case-against-facebook. “‘Facebook Will Not Go Quietly, and They Have a Huge Amount of Money to Fight It’-Landmark Lawsuits,” The Economist (The Economist Newspaper), accessed March 19, 2021, https://www.economist.com/podcasts/2020/12/10/facebook-will-not-go-quietly-and-they-have-a-huge-amount-of-money-to-fight-it-landmark-lawsuits.