The two lawsuits, although coordinated, are separate, the New York Attorney General said. New York Attorney General Letitia James said that “for nearly a decade, Facebook has used its power of dominance and monopoly to crush smaller rivals and stifle competition, all at the expense of everyday users.” . Of the 50 US states, not only Georgia, South Dakota, Alabama and South Carolina participated in the cause.
We are taking action to stand up for the millions of consumers and many small businesses that have been harmed by Facebook’s illegal behavior.
– NY AG James (@NewYorkStateAG) December 9, 2020
The lawsuits concern in particular two acquisitions by Facebook: that of Instagram, in 2012, for a billion dollars and that of WhatsApp, in 2014, for 19 billion dollars, which would have allowed Facebook to create a monopoly in the services of social network. Thanks to this dominance, the FTC said, last year alone Facebook generated revenues of more than 70 billion and profits of more than 18.5 billion.
The FTC also claims that the acquisitions of Instagram and WhatsApp were designed by Facebook with the aim of limiting competition, identifying from time to time what could be the threats to its dominance in the market. Instagram became a very popular social network in the important period of the transition of social networks from computers to smartphones, when the need for photo sharing was increasing among consumers. Facebook initially tried to compete with Instagram in its own field by trying to improve its offering, but then decided to buy Instagram instead of competing.
In a similar way – according to the indictment – the evaluations for the acquisition two years later of WhatsApp, already then one of the most used instant messaging apps in the world, took place. In both cases, the FTC explains, the acquisitions neutralized both the direct threats of Instagram and Whatsapp, but also the possibility that other small companies with valid proposals would impose themselves on the market with companies operating in the same areas.
The New York Attorney General and the Coalition of States are therefore calling for decisions to be made in the process to prevent Facebook’s conduct of this kind in the future, forcing it not to be able to make acquisitions above 10 million dollars (far less than the billion spent. for Instagram and 19 billion for Whatsapp) without first notifying the state of New York or others who have reported it. They also ask to evaluate the possibility of imposing on Facebook the “sale or restructuring” of Instagram and Whatsapp or its other current activities.
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Facebook defended itself through its legal advisor Jennifer Newstead, who in a statement reported by the New York Times he said that the most important thing in this lawsuit, and not mentioned by the 53-page indictment, is that these acquisitions have now taken place years ago. “The government now wants us to go back, but in doing so the message it sends to American companies is that no sale is ever final.” Following the announcement of the lawsuits, Facebook’s stock fell 2% to $ 277.70 per share.
#BREAKING: @FTC today sued Facebook (FB), alleging that the company is illegally maintaining its personal social networking monopoly through a years-long course of anticompetitive conduct: https://t.co/8ouOSM5De8 1/12 pic.twitter.com/7nvpNGnltb
— FTC (@FTC) December 9, 2020
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