For Immediate Release:
December 9, 2020
WASHINGTON, DC – Today, the Federal Trade Commission and more than 40 state attorneys general filed antitrust lawsuits against Facebook, arguing that Facebook solidified its social networking monopoly by buying or killing off rivals. The suit comes after our recent paper outlining a roadmap for an antitrust case against Facebook that argued that the company had carried out a series of acquisitions of small and nascent competitors, among them Instagram and WhatsApp (both at significant premiums), in a strategy that appears designed to stave off potential rivals rather than to take advantage of business synergies or efficiencies.
The following can be attributed to David Dinielli, Senior Advisor at Omidyar Network:
“The lawsuits introduced today by more than 40 state attorneys general and the Federal Trade Commission against Facebook should get a lot of ‘likes’ from consumers. Facebook’s calculated strategy to consolidate its dominant position by buying or locking out potential competition (like Instagram, WhatsApp, or Vine) has come at a huge cost to innovation, consumer choice, and democracy. Facebook alone should not control the marketplace of ideas. Nor should it continue to profit from the spread of disinformation and hate, all while illegally protecting itself potential competitors that might operate with different sets of values and priorities.
We welcome these cases as more evidence that we are entering a new era of public accountability for dominant tech platforms. But antitrust action alone will not protect consumers and restore competition to the social media market. Congress and the next administration must develop new laws and rules.“
Full Statement from Omidyar Network
Today, the Federal Trade Commission and more than 40 state attorneys general filed antitrust lawsuits against Facebook, arguing that Facebook solidified its social networking monopoly by buying or killing off rivals. These lawsuits should get a lot of ‘likes’ from consumers. Facebook’s calculated strategy to build and maintain its dominant position by buying or disabling potential competitors (like Instagram, WhatsApp, or Vine) has come at a huge cost to innovation, consumer welfare, and democracy. Given the importance of social networks, we all deserve a market that responds to consumer demands. Facebook alone should not control the marketplace of ideas. Nor should it continue to profit from the spread of disinformation and hate, all while illegally protecting itself from potential competitors that might operate with different sets of values and priorities.
Facebook has achieved extraordinary financial and commercial success. Its size, scope, and wealth should position Facebook to make massive contributions to innovation and consumer welfare. Because of its outsize role in our personal, civic, and political lives, Facebook ought to provide the very best services its abundant resources can support. It would have no choice in the matter if it faced competition.
But instead, Facebook embarked on a series of acquisitions designed to eliminate competition from nascent competitors. And it manipulated its APIs (short for Application Program Interface, the standard way for programmers to work with code written by others) so as to control and limit any threat posed by complementary service providers. Facebook eliminated competition by cutting off applications on its own platform that were popular with users because those applications represented potential competition that it feared. And when API manipulation was insufficiently protective, Facebook simply gobbled up those potential competitors outright.
The ideal outcome of these lawsuits is the restoration of competition and safer, more innovative choices for consumers in the social media market. A dominant Facebook appears to be able to take almost any action, whether about price, politics, or psychology, without losing its position. Recent events underscore what we might be missing, as politicians as well as members of the polity decry the power of just a few internet platforms in shaping the democratic discourse on issues ranging from voting rights protection to police-involved violence to the pandemic. Imagine if there were a dozen social networks rather than one, how differently these democratic issues would manifest themselves; users would be able to depart from a platform that did not adhere to their standard of quality or values. But this world with choice requires Facebook to be compelled to compete.
Today’s filings are an important first step in enforcing existing laws governing Facebook’s improper past conduct. But this journey is not over; the legal process could take many years to resolve, and other concerns will need to be addressed. For example, a recent report from the United Kingdom’s Competition & Markets Authority demonstrates that Facebook grew its market share in part by deploying dark patterns, skulduggery, and other misleading and fraudulent behavior regarding its data collection efforts so that it could, on one hand, placate users, and on the other, endear itself to advertisers (whose interest was targeted ads) in order to sell them valuable and expensive advertising. Consumers and other market players deserve better.
Consumers, competition, our economy, and our democracy have already paid too high a price for what are seen as “free” services. Undoubtedly, Facebook has provided valuable, at some point in time innovative, services that have become essential to everyone’s lives, creating the foundation for how we live, work, and play. And like other products that are embedded in our lives technology companies should be held to the highest standards. However, if left unchecked, Facebook’s practices will continue to create serious consequences for advertisers, publishers, foreclosed technological rivals, and the public.
To that end, and alongside this case, we call for continued federal and state-level attention toward Facebook’s many anti-competitive practices. Because antitrust action alone will not protect consumers and restore competition to the social media market, Congress and the next Administration should pursue the development of new laws and rules.