Colorado Joins Suit Accusing Facebook Of Creating Monopoly

The Federal Trade Commission, with bipartisan support from attorneys general in Colorado and dozens of others, filed an antitrust lawsuit in federal court Wednesday against social media giant Facebook.

In the suit, the FTC accuses the company of illegally dominating the social media industry and eliminating business threats through years of monopolization and anti-competitive conduct.

According to the complaint, Facebook has used a “systematic strategy” over the years to eliminate threats to its business. This includes the company’s acquisition of Instagram in 2012 and mobile messaging app WhatsApp in 2014, both of which were perceived as an “existential threat to Facebook’s monopoly power.”

Don’t miss the latest news updates in Colorado. Sign up for free Patch news alerts and newsletters for what you need to know daily.

The lawsuit also alleges Facebook has limited third-party software developers’ access to interconnections to its platform, allowing access only after developers “refrain from developing competing functionalities, and from connecting with or promoting other social networking services.”

As a result of its actions, the lawsuit alleges, Facebook has seen “staggering” profits. Last year, Facebook generated revenues of more than $70 billion and profits of more than $18.5 billion.

The complaint states that Facebook’s actions have not only harmed competition but also left consumers with few choices for personal social networking and deprived advertisers of the benefits of competition.

With the suit, the FTC is seeking an injunction in federal court that could require Facebook to divest its assets, including Instagram and WhatsApp, and require Facebook to seek prior approval for future mergers and acquisitions.

“Personal social networking is central to the lives of millions of Americans,” Ian Conner, director of the FTC’s Bureau of Competition, said in a release. “Our aim is to roll back Facebook’s anti-competitive conduct and restore competition so that innovation and free competition can thrive.”

The lawsuit was filed following an investigation by the FTC’s Technology Enforcement Division.

Attorneys general from 46 states, the District of Columbia and Guam comprise the bipartisan coalition that signed on in support of the lawsuit.

Colorado Attorney General Phil Weiser is a member of the bipartisan eight-member executive committee of state attorneys general that led the multistate investigation of Facebook.

“The American way is to allow all companies to compete fairly and to provide consumers with the promise of new, innovative, and better products and services spurred by competition," Weiser said in a statement.

"A bipartisan group of state attorneys general have filed this action against Facebook because its campaign of promising to either ‘buy or bury’ competitive threats has undermined competition, harmed consumers, and thwarted innovation,” Weiser said.

“Facebook’s dominance in the social network marketplace can only be challenged once its anticompetitive actions have been addressed and remedied, thereby enabling both consumers and innovators to benefit from competition.”

Here's Facebook's full statement:

"This is revisionist history. Antitrust laws exist to protect consumers and promote innovation, not to punish successful businesses. Instagram and WhatsApp became the incredible products they are today because Facebook invested billions of dollars, and years of innovation and expertise, to develop new features and better experiences for the millions who enjoy those products. The most important fact in this case, which the Commission does not mention in its 53-page complaint, is that it cleared these acquisitions years ago. The government now wants a do-over, sending a chilling warning to American business that no sale is ever final. People and small businesses don't choose to use Facebook's free services and advertising because they have to, they use them because our apps and services deliver the most value. We are going to vigorously defend people's ability to continue making that choice." - Jennifer Newstead, Vice President and General Counsel, Facebook