Anti-Trust case against Facebook
Antitrust laws are regulations, which encourage competition by limiting the market power of any particular firm. These laws ensure that mergers and acquisitions do not concentrate on market power or form monopolies in the market.
Key Points for UPSC Prelims
- The Anti-trust laws also prevent multiple firms from conspiring to form a cartel, to limit competition through activities like price-fixing.
- The lawsuit filed by the US Federal Trade Commission (FTC), accused Facebook of eliminating competition with the acquisitions.
- Facebook’s acquisition of Instagram in the year 2012 for USD 1 billion and the acquisition of WhatsApp for USD 19 billion in the year 2014 are being mentioned as attempts to illegally eliminate competition.
What is the FTC lawsuit?
- United States federal government and governments of 48 US states and territories have filed two lawsuits against Facebook that the company is illegally maintaining its monopoly through anticompetitive behavior.
- The lawsuit has been filed under Section 2 of the Sherman Act which bars companies from using anticompetitive policies for maintaining a monopoly.
- The case cites the acquisition of Instagram and Whatsapp by Facebook as illegal for cutting down the competition.
- The lawsuit also describes how the company has restricted the 3rd party software developers through strict control over its programming interface.
- The case also gives the example of the Vine app of Twitter for which Facebook shut down the API access.
What does FTC want?
US Federal Trade Commission wants the divestitures of assets by Facebook including Whatsapp and Instagram. Also, FTC wants to bar Facebook from imposing anti-competitive conditions on software developers. However, both the acquisitions were approved by FTC itself. On this, the commission said that if an approval tends to violate the law, previous approvals can be challenged.
What does Facebook say?
As per Facebook, that both the acquisitions were approved by FTC itself and it is not true that it does not have competitors. It named Google, Amazon, Twitter, Tiktok, Snap, etc. as some of its competitors.