- Apr 12, 2001
The United States Federal Trade Commission today reinforced its antitrust case against Facebook by providing more detail on how the company either crushed or bought out its rivals in an attempt to get rid of competition.
The updated filing is longer than the original complaint and it offers additional evidence in favor of the FTC's argument that Facebook is a monopolist, plus it again asks the judge overseeing the case to force Facebook to sell Instagram and WhatsApp, the two social networking apps that Facebook also operates.
In the complaint, the FTC says that Facebook used an illegal "buy-or-bury" scheme to maintain its dominance in the social networking market after it failed to "develop innovative mobile features" during the transition from desktop to mobile devices. Facebook is also accused of luring developers to its platform, surveilling them for signs of success, and then burying them when they became a threat.
With no "serious competition," the FTC says that Facebook has been able to "hone a surveillance-based advertising model" that causes increasing harm to consumers.
According to the FTC, Facebook was unable to integrate its desktop-based technology to mobile devices, and when it was unable to fairly compete, Facebook executives addressed the threat by buying up new innovators in the space like Instagram and WhatsApp, who had "succeeded where Facebook failed.""Facebook lacked the business acumen and technical talent to survive the transition to mobile. After failing to compete with new innovators, Facebook illegally bought or buried them when their popularity became an existential threat," said Holly Vedova, FTC Bureau of Competition Acting Director. "This conduct is no less anticompetitive than if Facebook had bribed emerging app competitors not to compete. The antitrust laws were enacted to prevent precisely this type of illegal activity by monopolists. Facebook's actions have suppressed innovation and product quality improvements. And they have degraded the social network experience, subjecting users to lower levels of privacy and data protections and more intrusive ads. The FTC's action today seeks to put an end to this illegal activity and restore competition for the benefit of Americans and honest businesses alike."
Facebook's policies of hindering third-party developers on its Facebook Platform impacted companies like Circle and Path, and also "deprived consumers of promising and disrupting mavericks" that would have been able to force Facebook to make improvements to its own social network.
The FTC says that its amended complaint provides direct evidence that Facebook has the power to control prices, drive competitors out of business, and reduce the quality of the product delivered to consumers without losing a significant number of users.
The FTC originally filed an antitrust lawsuit against Facebook in December 2020, teaming up with 46 states, the District of Columbia, and the territory of Guam to accuse Facebook of maintaining an illegal social networking monopoly.
Article Link: FTC Accuses Facebook of Using 'Buy-or-Bury' Techniques to Stifle Competition and 'Hone a Surveillance-Based Advertising Model'