The Federal Trade Commission Readies an Antitrust Lawsuit against Facebook
The federal government has already taken the first step in its war on Big Tech with its antitrust lawsuit against Google. There are signs that the government will not be stopping with one lawsuit. The Federal Trade Commission is discussing the possibility of an antitrust lawsuit against Facebook. There is some support among agency staffers for the lawsuit, and now the Commissioners are discussing it. This will spark a long and costly legal battle as Facebook seeks to defend itself from any attempt to break up the company.
The Lawsuit Would be For Building a Monopoly By Buying Potential Competitors
The FTC has been investigating Facebook for over a year as the agency is looking into the possibility that the tech giant acted to stifle competition in its field. Some of the possible antitrust law violations would include how Facebook uses its dominant market position to acquire competitors and eliminate possible competition. One such acquisition was the $5 billion purchase of Instagram, a company that could have emerged as a major competitor to Facebook. The company also snuffed out another possible competitor when it purchased WhatsApp.
Buying companies can result in antitrust charges. The ultimate charge would be that Facebook wiped out competitors to build a monopoly. Federal laws do not make all monopolies illegal, but they are against the law when they were built through improper acts. Companies do not even need to exploit their monopoly power to face legal consequences.
However, there is some evidence that Facebook does use this power to kill off or gain advantages over competitors. Recently, a report from the House Judiciary subcommittee on antitrust determined that Facebook improperly uses monopoly power. The report recommended that Congress pass laws to strengthen scrutiny of any Big Tech acquisition. While this is not evidence in the FTC investigation, it is likely that the federal agency is seeing the same thing in its own investigation. The House subcommittee found that Facebook proactively determines which competitors could threaten it in the future and tries to acquire them to snuff out the threat. The House even obtained evidence of internal conversations between Zuckerberg and the company's chief financial officer that was evidence of improper intent with acquisitions.
The FTC Is Gauging Support Among its Commissioners
Right now, the FTC is deciding whether it has the support from its commissioners to file the lawsuit. There are five commissioners, and three of them need to vote in favor of filing the lawsuit given the seriousness of the charges. The FTC is currently controlled by Republican commissioners, and there has been a push among conservatives to take some action against Big Tech due to a perception that the companies have censored speech on the Right.
It is likely that the FTC will file some kind of lawsuit before the end of the year, especially if President Trump loses the election. The commissioners will want to put a legal marker down and start the process before a President Biden could appoint his own person to chair the FTC. However, support among the commissioners appears to be bipartisan.
There is some speculation that the FTC's suit will seek to force Facebook to spin off Instagram. Facebook may have to settle the lawsuit, even if it does not end up divesting from Instagram given the stakes involved. A prolonged lawsuit with the federal government may damage its brand. One only need to look back at the antitrust lawsuit against Microsoft two decades ago and the way that it sullied Bill Gates' reputation for decades. Mark Zuckerberg has already been interviewed by the FTC, and his reputation is not starting from a good place given all the coverage of how he started Facebook and election-related controversies.
Facebook is cooperating with the investigation for now. However, the company may fight back after the lawsuit is filed. Facebook would likely contend that it did not acquire these companies in order to gain a monopoly. Instead, it bought them to improve the user experience. At this point, Facebook is still trying to make its case to the FTC why it should not be sued.
This would be far from the end of its legal troubles. Facebook has already been embroiled in a number of large lawsuits recently. The company had to pay a $5 billion fine for its privacy practices and settled a class-action lawsuit in Illinois for breaking state privacy laws.
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