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FTC sues Facebook, aims to rollback acquisitions of WhatsApp and Instagram

Today, the Federal Trade Commission has announced it is suing Facebook, one of the largest social networks out there, and aims to make some changes.

According to the lawsuit filed today, the FTC alleges Facebook is “illegally maintaining its personal social networking monopoly through a years-long course of anticompetitive conduct”. This lawsuit is the result of a lengthy investigation, which a coalition of attorneys general in 46 different states, the District of Columbia, and Guam, all took part in.

Per the announcement today:

…the complaint alleges that Facebook has engaged in a systematic strategy—including its 2012 acquisition of up-and-coming rival Instagram, its 2014 acquisition of the mobile messaging app WhatsApp, and the imposition of anticompetitive conditions on software developers—to eliminate threats to its monopoly. This course of conduct harms competition, leaves consumers with few choices for personal social networking, and deprives advertisers of the benefits of competition.

The lawsuit is focusing on those acquisitions of Instagram and WhatsApp, primarily, setting those as prime examples of anticompetitive behavior. As a result, the lawsuit is aiming to secure a permanent injunction, which could rollback those acquisitions made by Facebook if it succeeds:

The FTC is seeking a permanent injunction in federal court that could, among other things: require divestitures of assets, including Instagram and WhatsApp; prohibit Facebook from imposing anticompetitive conditions on software developers; and require Facebook to seek prior notice and approval for future mergers and acquisitions.

The lawsuit states that Facebook has entrenched itself within its monopoly, and is denying customers the “benefits of competition”.

“Personal social networking is central to the lives of millions of Americans,” said Ian Conner, Director of the FTC’s Bureau of Competition. “Facebook’s actions to entrench and maintain its monopoly deny consumers the benefits of competition. Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive.

That’s not all, either. The lawsuit against Facebook goes on to say that the company has moved forward with anticompetitive behavior on its platform to third-party developers. It even alleges that Facebook has given access to some APIs to developers on the grounds that they agreed to not create any competing products:

In particular, Facebook allegedly has made key APIs available to third-party applications only on the condition that they refrain from developing competing functionalities, and from connecting with or promoting other social networking services.

The complaint alleges that Facebook has enforced these policies by cutting off API access to blunt perceived competitive threats from rival personal social networking services, mobile messaging apps, and other apps with social functionalities. For example, in 2013, Twitter launched the app Vine, which allowed users to shoot and share short video segments. In response, according to the complaint, Facebook shut down the API that would have allowed Vine to access friends via Facebook.

This is a wild development, and has a huge backing. What happens next will be interesting, to say the least.

You can read the full release by the FTC here.

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