National suit alleges company maintains illegal monopoly
MASSACHUSETTS ATTORNEY GENERAL Maura Healey has signed onto a massive lawsuit against Facebook that has the potential to restructure one of the country’s biggest and most powerful technology companies.
Healey was part of a bipartisan group of 47 attorneys general, led by the state of New York, that filed suit in US District Court in Washington, DC, alleging that Facebook illegally stifled competition to maintain its monopoly power. A separate complaint was filed by the Federal Trade Commission, which coordinated with the attorneys general in their investigation.
“For nearly a decade, Facebook and Mark Zuckerberg ran an illegal monopoly in the social media sphere by buying out companies that showed promise as potential competitors and blocking others – and they did this at the expense of their users’ time and privacy,” Healey said in a statement. “We are suing to stand up for the millions of consumers and small businesses that have been harmed by Facebook’s illegal business practices.”
Facebook itself has a Massachusetts connection. It was founded by Zuckerberg in 2004 during his sophomore year at Harvard, although Zuckerberg would leave Harvard and move the company’s headquarters to California.
Today, according to the lawsuit, on any given day, more than half the US population over age 13 logs into a Facebook-owned service.
The lawsuit argues that Facebook illegally maintains a monopoly over the US personal social networking market by “deploying a buy-or-bury strategy that thwarts competition and harms both users and advertisers.” If a company tries to compete with Facebook, Zuckerberg buys them out. If the company resists, Zuckerberg blocks their access to Facebook – which leads to a drop in usage of their app.
One competitor cited in the suit said if a technology firm stepped onto Facebook’s turf or resisted pressure to sell, “Zuckerberg would go into ‘destroy mode’ subjecting your business to the ‘wrath of Mark.’”
The lawsuit cites Facebook’s acquisition of Instagram for $1 billion and WhatsApp for nearly $19 billion as examples of Zuckerberg offering inflated prices for a company in order to maintain Facebook’s dominance.
The lawsuit asks a judge to require Facebook to give notice of any future large acquisitions and to potentially require Facebook to divest itself of “illegally acquired companies” – including Instagram and WhatsApp.
The New York Times says the lawsuit underscores “the growing bipartisan and international tsunami against Big Tech,” with increasing regulatory scrutiny on tech giants like Google, Amazon, Facebook and Apple. The Times notes that outgoing President Donald Trump and allies of President-elect Joe Biden have both argued that a few tech giants have too much power.
In October, the US Department of Justice and 11 Republican attorneys general sued Google on antitrust grounds, alleging that it used its dominance of the online search marketplace to stifle competition. The new Facebook lawsuit drew praise from politicians of both political parties on Capitol Hill.
Facebook has denied wrongdoing, with Facebook general counsel Jennifer Newstead calling the complaints “revisionist history.” “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,” Newstead said in a statement, reported by Politico. “The government now wants a do-over, sending a chilling warning to American business that no sale is ever final.”
Politico says the last lawsuit to break up a major US company was resolved in 1984 with the breakup of AT&T’s Bell telephone monopoly.