US sues Facebook over its WhatsApp, Instagram acquisition alleging monopoly

Washington DC: The US government and 48 states have filed parallel antitrust lawsuits against Facebook, accusing the social media giant of anti-competitive conduct by abusing its market power to create a monopoly and crushing smaller competitors, a move which may force it to sell WhatsApp and Instagram.

Soon after the Federal Trade Commission (FTC) and 48 state attorney generals on Wednesday sued the California-headquartered company, Facebook's shares dropped significantly.

The bipartisan coalition led by New York attorney general Letitia James alleged that Facebook has engaged in a systematic strategy to eliminate threats to its monopoly. This includes its 2012 acquisition of up-and-coming rival Instagram, its 2014 acquisition of the mobile messaging app WhatsApp and the imposition of anti-competitive conditions on software developers.

According to the federal complaint, this course of conduct by Facebook harms competition, leaves consumers with few choices for personal social networking and deprives advertisers of the benefits of competition.

For nearly a decade, Facebook used its dominance and monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users, James told reporters at a news conference.

The lawsuit is seeking a permanent injunction in federal court that could, among other things: require divestitures of assets, including Instagram and WhatsApp; prohibit Facebook from imposing anti-competitive conditions on software developers; and require the social media behemoth to seek prior notice and approval for future mergers and acquisitions.

According to the complaint, Facebook is the world's dominant personal social networking service and has monopoly power in a market for personal social networking services. This unmatched position has provided Facebook with staggering profits. Last year alone, Facebook generated revenues of over $70 billion and profits of more than $18.5 billion.