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US regulators want Facebook to divest Instagram, WhatsApp over monopoly concerns

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
Logos of Facebook, WhatsApp and Instagram (File photo)

The US Federal Trade Commission (FTC) and nearly every US state have sued Facebook, alleging that the social media company engaged in anti-competitive conduct and abused its dominance in the digital marketplace.

The lawsuit filed on Wednesday requires that Facebook sell its photo-sharing app Instagram and messaging app WhatsApp, accusing the company of using a “buy or bury” strategy to snap up competitors and keep smaller rivals at bay.

“For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals, snuff out competition, all at the expense of everyday users,” New York Attorney General Letitia James said on behalf of the coalition of 46 states, Washington, D.C. and Guam.

Alabama, Georgia, South Carolina and South Dakota did not partake in the lawsuit.

In its suit, the Federal Trade Commission also wants to require the media giant 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, in a statement.

"Facebook's actions to entrench and maintain its monopoly deny consumers the benefits of competition. Our aim is to roll back Facebook's anti-competitive conduct and restore competition so that innovation and free competition can thrive."

The lawsuit makes Facebook the second big tech company to face a major legal challenge so far this year after the US Justice Department lodged a suit against Alphabet Inc’s Google in October, accusing the $1 trillion firm of using its market power to fend off rivals.

The lawsuits are indicative of the growing bipartisan consensus to level criticism at Big Tech for its business practices, marking a rare moment of agreement between the administration of Republican President Donald Trump and Democrats, some of whom have supported breaking up both Google and Facebook.

The new complaints allege Facebook bought up competitors, focusing specifically on its previous acquisitions of Instagram for $1 billion in 2012 and WhatsApp for $19 billion in 2014.

According to James, the company acquired rivals before they could even threaten the giant’s dominance.

In response, Facebook’s general counsel Jennifer Newstead called the suits “revisionist history,” saying antitrust laws were not passed to punish “successful companies.”

Newstead added the reason WhatsApp and Instagram became successful is the fact that Facebook invested billions of dollars in growing them.

“The government now wants a do-over, sending a chilling warning to American business that no sale is ever final,” Newstead said.

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