On Wednesday the US Federal Trade Commission alongside a coalition of 46 United States attorney generals have filed antitrust lawsuits against Facebook, alleging that its ownership of Instagram and WhatsApp are in violation of the Clayton Act of 1914.
Should Facebook be found guilty in the lawsuits, the company could be forced to divest both Instagram and WhatsApp, as well as curb future acquisitions.
“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,” said New York Attorney General Letitia James on behalf of the coalition of 46 states.
“Facebook has maintained its monopoly position by buying up companies that present competitive threats and by imposing restrictive policies that unjustifiably hinder actual or potential rivals that Facebook does not or cannot acquire.”
This is likely to be a long legal battle, but should the FTC and states get their wish, it will radically change how Facebook functions.
Facebook: what does it do with user's data?
At the heart of the lawsuit is the argument that Facebook has enjoyed a monopoly on social media for the better part of the last decade, turning customer data into a sprawling business empire.
According to Facebook, however, Instagram and WhatsApp have only become as popular as they are because of the financial investments Facebook has made. Without them, Jennifer Newstead, Facebook's vice president and general counsel says, they wouldn’t have become what they are today.
"Instagram and WhatsApp became the incredible products they are today because Facebook invested billions of dollars, and years of innovation and expertise, to develop new features and better experiences for the millions who enjoy those products," Newstead said in a statement issued to Buzzfeed News. "The most important fact in this case, which the Commission does not mention in its 53-page complaint, is that it cleared these acquisitions years ago. The government now wants a do-over, sending a chilling warning to American business that no sale is ever final."
It’s no secret that Facebook monetizes its users’ data, and has done so over the last decade. But what the lawsuit alleges is that Facebook benefited from the lack of competition in the space, allowing the company to expand and grow in a market that otherwise would have provided some resistance.
How could this change Facebook?
Besides the obvious structural implications to Facebook, the move could radically change how Facebook works in the future.
Should Facebook divest Instagram, you might no longer be able to find your Facebook friends on the site as easily as you had when the two companies were under the same umbrella, and it means that sharing content from one platform to the other could be more difficult - or even impossible - depending on which company snaps up the service.
On the backend, Facebook would be able to collect less data from its customers if it only had one site. As Bustle reported back in 2018, information collected on Instagram can be used by Facebook advertisers - i.e. cutting off one part of Facebook’s business arm would mean that the company has less data to sell to advertisers, potentially hurting the its bottom line.
Facebook’s fiduciary relationship with WhatsApp is a bit more complicated, given the nature of WhatsApp’s business model, but one might assume that there are similar benefits for Facebook by owning both services.
For users, however, it might mean that WhatsApp could be available in fewer countries, as the service has benefited from Facebook’s global development team, or it could mean that the service will be slower to reach users in burgeoning markets.
Is more accountability a bad thing?
Some of the same issues with Facebook’s business model that appeared in today's filings were recently brought to light in The Social Dilemma, which made its debut earlier this year on Netflix, though Facebook has said publicly that the film purposely obfuscates key points in an attempt to scare its users.
Today’s lawsuit rehashes some of the same points brought up in the film - including how Facebook’s dominance in the social media landscape has made it almost impossible to avoid and the fact that it has a chokehold on its users data.
Despite Facebook rallying against those claims, many outlets, including The Wall Street Journal and Buzzfeed News, have brought up a key moment from the FTC's probe earlier this year, where the government presented emails from 2008 in which Facebook CEO Mark Zuckerberg said that “it is better to buy than compete” proving that there is at least a grain of truth to the documentary's conceit.
It's impossible to predict the outcome at this stage, but these lawsuits might dredge up new evidence into Facebook’s alleged business misconduct or, at the very least, hold the company more accountable in future transactions.
