Facebook Could Be Broken Up

The US Federal Trade Commission (FTC) is pursuing legal action to bring about the disintegration of Facebook and is specifically asking for the sale of Instagram and WhatsApp. 

“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,” the FTC said in the lawsuit which was filed in a US  federal court in Washington.

Facebook is the world’s dominant online social network and more than 3 billion people regularly use Facebook’s services to connect with friends and family and enrich their social lives. 

The FTC filing states that “... But not content with attracting and retaining users through competition on the merits, 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.” 

The FTC alleges violation of federal law and attorneys general from 46  federal states have signed up to support the lawsuit

Breaking up platforms is a popular proposal for antitrust action and has been used very effectively in the past, notably the historic disintegration of the monopolist Standard Oil company into five much smaller and separate units, under President Theodore Roosevelt.

A break up of Facebook  might not, however,  be enough to tackle the true source of platforms’ monopolistic power as reducing the company to its separate components of Facebook, Instagram, WhatsApp probably would not change their dominant position in their respective markets. 

Facebook has become dominant because the company has successfully established a network effects and the value its users derive from using the platform increases with the number of other users. The FTC  lawsuit suggests that Facebook used a strategy of neutralising competitors before they could threaten the company's dominance of the social-media market. 

The FTC court filing  draws attention to Facebook's decisions to buy rather than compete with Instagram and WhatsApp  and says that Facebook allege it imposed "anticompetitive conditions" on software developers. It also alleges that Facebook has engaged in illegal patterns of behavior, which both the states and federal investigators have worked together to describe in the complaint.

US Federal Trade Commission:      NBC:         Business Insider:      Open Democracy:     Techcrunch

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