In twin lawsuits filed by multiple US states and the government, Facebook has been accused of misusing its position to diminish the market competition to establish its dominance in the digital marketplace.
More importantly, the Federal Trade Commission (FTC), which looks after trade ethics and healthy competition within the market, is filing an injunction, asking Facebook to divest two of its major assets: Instagram and WhatsApp.
Facebook vs U.S. government legal war heating up
If this injunction is successful, Facebook would have to break up and form individual business entities for Instagram and WhatsApp; now, all these apps come under Facebook.
Facebook has been a significant target for anti-competition watchdogs in the United States for more than half a decade. Its acquisition of Instagram and WhatsApp in $2 billion and $19 billion, respectively, sparked controversy, with critics saying that Facebook closed these deals to prevent competition.
Some 14 months ago, the New York Attorney General Letitia James had announced that her office was teaming up with a bunch of attorneys to bring Facebook’s anti-competitive practices to the limelight. FTC, on the other hand, has been active in this endeavor for years now.
This lawsuit comes when Facebook is expanding its plans to create an interconnected channel that could boost advertising revenues by linking Messenger, Instagram, and WhatsApp. This social networking tech giant has made gradual changes in all three apps, which would have allowed it to turn Messenger and Instagram to ‘digital forefronts’ and WhatsApp to a place where the deals/payment take place.
In countries where WhatsApp has become an easy and popular alternative to SMS texts, it recently launched some payment options. However, it’s unclear what happens to these plans in light of the lawsuits.
Facebook has replied to these lawsuits, saying that it does not impose its products on customers or attempt to diminish competition in the market. The social media giant has also added that the government had approved Instagram and WhatsApp’s acquisition during the merger.
It said that the government is now making things complicated by asking for a do-over. At the same time, market experts have opinionated that the FTC has the right to challenge the anti-competitive nature of a deal even if the US merger law approved it.