Did Facebook break an antitrust law by buying Instagram?
Hit with more scrutiny in an antitrust crackdown, Facebook is once again in the hot seat. Facebook hasn’t had it easy as of late, the company recently slapped with a $5 billion fine for privacy practice violations related to the Cambridge Analytica scandal. Facebook chief Mark Zuckerberg is forced to keep rolling with the punches.
The Federal Trade Commission (FTC) is now prepping another case against Facebook – a potential antitrust lawsuit on the horizon. The FTC has kept a close eye on Facebook’s track record of buying smaller companies such as Instagram & WhatsApp. Though the FTC initially approved Facebook’s acquisitions of these companies, it has the authority to reanalyze the receipts as they investigate.
Facebook is just one company among tech companies many who may be guilty of potential anticompetitive practice in the industry. The FTC is looking into Zuckerberg’s intentions when acquiring the $1 billion up-and-coming social media website Instagram.
During a house antitrust hearing in July, Amazon, Apple, Facebook, & Google were aggressively questioned about their business practices. Likened to kings, these powerful companies are facing a thorough antitrust investigation, potential consequences pending. Facebook, in its dominant social media position, attracted enough attention to carry forward with the investigation.
An antitrust hearing including Amazon & Google CEOs dug up many suspicious emails between Facebook execs. One email talked of “neutralizing a potential competitor” as its objective. Zuckerberg also reportedly sent an email saying that Facebook “can likely always just buy any competitive startups.” He, of course, claims he didn’t remember writing the note and called it “a joke.”
During the Silicon Valley antitrust crackdown in 2019, a CNBC Technology Executive Council surveyed tech execs all across the economy asking “which big tech company is most likely to face punitive action?” Fifty-five percent voted for Facebook, whereas other options like Google & Amazon got sixteen percent or less. Clearly, Facebook did become a major target for antitrust scrutiny.
The FTC is still settling whether or not to file the lawsuit. The Wall Street Journal claims that they’re still in need of commissioner votes in favor of moving forward with the lawsuit before further action can be taken. However, waiting to file the lawsuit may drag out the process over the span of years. Not to mention, the upcoming elections could have a big impact on the outcome of the case.
According to The New York Times, it’ll be “virtually impossible” for this FTC investigation to conclude before 2021. However, recent changes may allow for more rapid progress. We’ll have to wait to hear exactly how the FTC plans to proceed with the investigation.
If Facebook ends up losing the potential antitrust case, it could be forced to divide its business. It all depends on what the investigation upturns and how things go down in court. Will the FTC find that Facebook attempted to stifle competition as a dominant tech powerhouse in the market?
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