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FTC Sues Facebook for Being a Social Media Monopoly, Calls for Sale of Instagram and WhatsApp

FTC Sues Facebook for Being a Social Media Monopoly, Calls for Sale of Instagram and WhatsApp

The United States Federal Trade Commission today joined up with 46 U.S. states, the District of Columbia, and the territory of Guam to sue Facebook. The group claims Facebook is maintaining an illegal social networking monopoly and has engaged in anti-competitive conduct over the years.

The complaint alleges that Facebook has engaged in a systematic strategy—including its 2012 acquisition of Instagram, its 2014 acquisition of the mobile messaging app WhatsApp, and the imposition of anti-competitive conditions on software developers—to eliminate threats to its monopoly.

The FTC says this conduct harms competition, leaves consumers with few choices for personal social networking, and deprives advertisers of the benefits of competition.

The FTC is seeking a permanent injunction in federal court that could, among other things: require divestitures of assets, including Instagram and WhatsApp; prohibit Facebook from imposing anticompetitive conditions on software developers and require Facebook to seek prior notice and approval for future mergers and acquisitions.

“Personal social networking is central to the lives of millions of Americans,” said Ian Conner, Director of the FTC’s Bureau of Competition. “Facebook’s actions to entrench and maintain its monopoly deny consumers the benefits of competition. Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive.”

The complaint says that Facebook chose to purchase Instagram in order to neutralize the threat presented by the up-and-coming social network. Facebook allegedly made a similar move to eliminate the messaging threat posed by WhatsApp when it purchased the mobile messaging app.

According to the FTC’s complaint, Facebook is the world’s dominant personal social networking service and has monopoly power in a market for personal social networking services.  This unmatched position has provided Facebook with staggering profits. Last year alone, Facebook generated revenues of more than $70 billion and profits of more than $18.5 billion.

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