The Federal Trade Commission and 47 states have filed a lawsuit to break up Facebook.
This is long overdue.
As an aside, at the top of the list should be the replacement of all the class B shares of Facebook, the ones with special voting rights that allow Zuckerberg to maintain complete control of the company, with class A shares, at least on a temporary basis.
Mark Zuckerberg's 58% of the vote would become 5.8% of the vote, and the slightly less psychopathic "adults in the room" could deal with take charge.
A breakup will take years and millions of dollars. Changing the class of
shares could be done almost instantly, and the the cost of this would be
The lawsuit is calling for Instagram and WhatsApp to be spun out from Facebook:
The Federal Trade Commission and a coalition of 47 states attorneys general today filed a pair of long-awaited antitrust suits against Facebook, alleging that the company abused its power in the marketplace to neutralize competitors through acquisitions and prevent anyone else from presenting a more privacy-friendly alternative to consumers.
"By using its vast troves of data and money, Facebook has quashed or hindered what the company perceived as potential threats," New York Attorney General Letitia James, who led the states' effort, said. "In an effort to maintain its market dominance, Facebook has employed a strategy to impede competing services."
The lawsuit brought by the states (PDF) asks the court to prohibit Facebook from engaging in "any anticompetitive conduct" or practice going forward. That includes a request for Facebook to be blocked from any acquisitions valued at greater than $10 million without first getting permission from the states.
The states also explicitly ask that Facebook's acquisitions of Instagram and WhatsApp be found in violation of the Clayton Act and that Facebook be required to divest those businesses if necessary "to restore competitive conditions" in the marketplace.
The suit filed by the FTC (PDF) also calls for Facebook to face more scrutiny when it acquires other firms and to be broken up if necessary to restore competition in the marketplace.
As we've explained before, antitrust law isn't just about being a literal monopoly or even about being the biggest player in a sector. Instead, it's about power—how much you have, and what you do with it. Antitrust investigators basically want to answer the question: did you become the biggest naturally, or did you cheat along the way?
In that framing, then, Facebook stands accused of cheating to beat out any potential competition—a lot.
Emails obtained by Congress earlier this year as part of its investigation into Big Tech's outsized power revealed that Zuckerberg explicitly thought of Instagram as a threat before acquiring it.
If apps such as Instagram were allowed to grow, Zuckerberg wrote in a 2012 email, it "could be very disruptive" to Facebook, and he added that an acquisition "will give us a year or more to integrate their dynamics before anyone can get to their scale again."
The FTC and the states both launched their antitrust investigations back in the long-long ago of 2019, as did Congress, European Union competition regulators, and regulators from several other nations. The Congressional report, published in October, now seems like a harbinger of today's suit: the House committee found that Facebook (as well as Apple, Google, and Amazon) exerts monopoly power in the marketplace and should be forced to split up.
It's incredibly rare in the modern era for the courts actually to force a company to break up for antitrust reasons. The last major breakup came more than 35 years ago, when AT&T finally split up in to the seven regional "Baby Bells" after a decade-long legal fight with the Justice Department. The court initially ordered a breakup in the Microsoft antitrust case that began in the late 1990s, but Microsoft appealed the ruling and, in 2001, reached a settlement with the DOJ that left its business intact.
Some of Facebook's app updates from earlier this year seem to have been designed with a potential antitrust suit in mind: the company in late 2019 began a plan to integrate WhatsApp, Facebook Messenger, and Instagram Direct messaging into a single service. The integration between Instagram's and Facebook's messaging services began in August; when all three platforms are combined, Facebook will reach an estimated 3.3 billion users on a single messaging service.
Which is, in and of itself, evidence of bad faith and monopolistic behavior.
"The claims being reported—serial predatory acquisition and withholding interoperability—set up a strong case," said Charlotte Slaiman, competition policy director at Public Knowledge. "This action reflects a lot of work from advocates, experts, and enforcement officials to build the case, first that Facebook was deserving of scrutiny, and then that the company really has run afoul of our antitrust laws. To fix the harms to competition, we need to see changes to Facebook's business and the company should be required to open up its network to competitors so that users are not locked in."
Whatever the plaintiffs are trying to achieve, they have to be as disruptive
as possible to Facebook, because otherwise, they are going to pull crap that
makes IBM's shenanigans in its antitrust defense look like tiddly winks.