Why is the US constantly forcing Facebook to sell Instagram and WhatsApp?

After more than a year of investigation, the last two lawsuits filed are the biggest antitrust challenge Facebook has faced to date. Both lawsuits essentially demanded a split between Facebook, forcing the company to withdraw its Instagram and WhatsApp acquisitions that year. Currently both of these apps have billions of users.

The lawsuit claims that recall is necessary because Facebook has acquired potential competitors to stifle competition and gain market advantage. At the same time, Facebook’s behavior also limits the choices of American consumers and reduces the privacy protection they may have.

“They have stifled innovation and reduced the ability to protect the privacy of millions of Americans. No company should have such uncontrolled influence on our personal information and our social activities, ”said New York State Attorney General Guam Letitia James.

The focus of the FTC is Facebook’s acquisition of Instagram and WhatsApp. Facebook acquired Instagram photo-sharing app for $ 1 billion in 2012 and global instant messaging app WhatsApp for $ 19 billion in 2014. The lawsuit alleges Facebook used these acquisitions. to grow into today’s monopoly and gain the ability to overwhelm unsuccessful competitors.

“For the past 10 years, Facebook has had a monopoly on the social networking market in the US”. The Attorney General’s joint lawsuit wrote, “Facebook illegally upheld its monopoly by obstructing competition through an ‘acquisition or destruction’ strategy, damaging the interests of its users. and advertisers ”.

The FTC’s lawsuit also reached the same conclusion. The lawsuit read: “Facebook doesn’t have content that attracts and retains users through competition. Instead, the company acquires companies that pose a competitive threat to its own business and applies unfair restriction policies, to impede actual or potential competition from unsuccessful acquisitions of the competitor and other methods to maintain their monopoly position ”.

Why does the US government think that Facebook is bad for Americans?

Although the FTC’s lawsuit and the attorney general’s case are not entirely the same, the two sides have cooperated, and both cases have made similar statements about why Facebook is a monopoly.

In essence, they believe Facebook is a powerful social media monopoly that collects large amounts of data about US users and uses this data to sell ads. While the lawsuit aims at the acquisitions of Instagram and WhatsApp, both cases see Facebook’s anti-competitive behavior as part of a broader behavioral model.

Many of the evidence presented in the lawsuit cited opinions from executives, including Mark Zuckerberg, to prove Facebook’s anti-competitive intentions.

The lawsuit also covered how Facebook treats developers, accusing the company of allowing other software vendors to use Facebook’s data to develop their own apps and connect their apps. with Facebook service. Such behavior is in Facebook’s favor as it will encourage more people to join and use Facebook more often

“Due to the illegal actions of Facebook, users of personal social networking services have suffered and continue to suffer various hurts, including deterioration of user experience, reduced choice of social media. prevent innovation and reduce investment in competitive services ”. The lawsuit also pointed out another consequence of all of this being damaging to American privacy. Because Facebook kills competitors, it can provide better privacy protection.

There is still a long way to go to split Facebook

So what is the solution to eliminate the harm that Facebook has caused to users and the market? Both lawsuits believe that Facebook should be separated. But achieving this goal is not easy, even if it can be broken down, it will take time. Hubbard of the Open Market Institute (US) said it could take years to force Facebook to divest from Instagram and WhatsApp through litigation. Other experts say the procedure may not be until next year or even 2022 to start.

Another problem is that Facebook continues to deepen connections between its apps, which could make it harder to split Facebook. In 2019, Facebook announced that it began to consolidate the technical infrastructure of instant messaging systems used by WhatsApp, Instagram and Facebook. The company also has bigger hopes for WhatsApp and said it could combine Facebook and Instagram’s advertising business with the WhatsApp platform.

After the lawsuit was announced, Facebook rejected the claims of the lawsuit, stressing that the FTC had approved the company’s acquisition of WhatsApp and Instagram a few years ago. Facebook then argued that the company also faced competition from other platforms (like Google and TikTok) in terms of ad spend.

But these are not the only reasons Facebook might use it. Currently, although it is not possible to evaluate the progress of the lawsuit, experts believe that the forced sale is not impossible. In addition, according to some experts these lawsuits “bring great possibilities for company restructuring”.

As a result, while allegations of anti-competitive behavior by Facebook are no longer new, the new lawsuit offers more opportunities for cooperation for its critics. Analysts also said that in the future, more stricter controls will be applied to large technology companies.