December 9, 2020
Facebook braces for high-stakes antitrust lawsuits from government over Instagram, WhatsApp
Facebook is bracing for one of the most significant legal battles in its 16-year history: Antitrust lawsuits from state and federal authorities that take direct aim at two prized acquisitions that have broadened its global footprint.
The two legal challenges, one from the Federal Trade Commission, the other from a coalition of up to 40 states, could come as early as Wednesday and are expected to allege that Facebook used its dominance and deep coffers to take out rivals and, in the process, harmed consumers who've had fewer choices and privacy protections as a result.
At issue are two megadeals, the $1 billion purchase of social media app Instagram in 2012 and the $19 billion purchase of messaging app WhatsApp in 2014 which positioned Facebook to rule the social media landscape.
Facebook could not be immediately reached for comment.
Concerns that Facebook has grown too powerful come as Washington looks to rein in Silicon Valley. The Justice Department slapped Google with an antitrust lawsuit earlier this year.
Facebook and Google have both argued that they offer free services that consumers flock to and operate in highly competitive markets.
A recent congressional investigation into the power of the tech industry focused on the Instagram and WhatsApp acquisitions and accused Facebook of snapping up competitive threats "to maintain and expand its dominance."
Facebook CEO Mark Zuckerberg told employees he would fight back against any government intervention.
"I don't want to have a major lawsuit against our own government," Zuckerberg told employees in response to calls to break up the company, according to a transcript of an internal meeting obtained by The Verge. "But look, at the end of the day, if someone's going to try to threaten something that existential, you go to the mat and you fight."
The Washington Post reported Tuesday night that the states and the U.S. government plan to file the lawsuits against Facebook on Wednesday.
The looming legal battles carry high stakes for Facebook, which could be forced to unwind the Instagram and WhatsApp deals, acquisitions that the FTC previously reviewed and cleared.
Zuckerberg appeared before Congress several times this year and made the case that Facebook's success comes from building products that people want and that the acquisitions of Instagram and WhatsApp helped fuel their growth.
In November, he told the Senate Judiciary Committee that Facebook did not view Instagram as a direct competitor in 2012.
"We had some competition with Instagram in the growing space of camera apps and photo-sharing apps but at the time I don't think we or anyone else viewed Instagram as a competitor as a large, multipurpose social platform," he said. "In fact, people at the time mocked our acquisition because they thought that we dramatically spent more money than we should have to acquire something that was viewed as primarily a camera and photo-sharing app at the time."
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