Facebook's long battle against US lawmakers seems to be reaching its peak though there are indications that the fight is far from over. This week, the US Federal Trade Commission and nearly every US state with the exception of South Dakota, South Carolina, Alabama and Georgia came together to file two major lawsuits against Facebook alleging anti-competitive practices. Facebook is not the only company in recent times to face such intense scrutiny with Google going through a similar situation earlier. But, depending on who you ask, the case against Facebook is stronger than the one that was filed against Google and Alphabet.
In particular, the complaints filed highlight the acquisition of Instagram and WhatsApp and how they were part of Facebook's larger strategy of 'buy or bury' in an attempt to muscle out its competition. Speaking on behalf of the coalition of 46 US states, New York Attorney General Letitia James stated that Facebook had used its market dominance to acquire potential rivals before they could actively threaten the company's dominance. While the actual debate over the matter could last a long time with every possibility of a protracted legal argument, the collection of states are looking to restrain Facebook from making any acquisitions with the value of USD 10 million-plus without notifying the plaintiff states. In addition, serious considerations are being made towards the potential breakup of Facebook with federal and state regulators calling for the acquisitions to be unwound. As may be easily imagined. Facebook is not likely to give in without a fight, particularly given that the FTC actually cleared both acquisitions separately earlier on. For its part, Facebook has claimed that it is being unjustly targeted as a successful company. Facebook counsel has referred to the lawsuits as "revisionist history" that sends a chilling message to American businesses that no sale is ever final. The company has broadly argued that Instagram and WhatsApp were made successful after Facebook investment and there were no elements of a 'buy or bury' mentality at play. Facebook has also questioned the common assertion of Facebook harming the market and its users through its anti-competitive practices. The scale and complexity of the matter at hand mean that regardless of how this plays out, any definite resolution on the matter could take years to play out. While Facebook could get out with a slap on the wrist and an ineffectual fine, state and federal level lawmakers look determined to make Facebook an example for other big tech companies that are frequently at loggerheads with the government. What's more, social media governance is one of the rare bi-partisan issues that US lawmakers from both sides of the political aisle can unite behind, an absolute rarity given the current political circumstances. For their own reasons, both the Trump administration and the incoming Biden administration have an interest in limiting the immense power of big-tech and particularly social media.
At this stage, both sides have expressed confidence in defending their position. Some experts have noted that unlike similar cases registered against Google, the Facebook breakup remedy case seems more likely because several company documents that were later reviewed can be considered damning as they appear to confirm the company's anti-competitive policies. On the other side, many have noted that undoing a purchase that was legally cleared would be a difficult precedent that the court may well be unwilling to establish given the broad fears it may inspire in the industry regarding government intent. While Facebook had previously attempted to settle such cases with fines, no such attempt has been made at this stage. What is clear is that neither side is likely to back down and bipartisan support means that this fight could go for a long time regardless of which side holds the Presidential office. Nevertheless, a more short-term concern for Mark Zuckerberg would be to stay on the good side of the public court of opinion. Experts have noted the similarities between this case and the antitrust law case filed against Microsoft in 1998. That case was ultimately settled and many industry experts criticised the government for setting an ill precedent for excessive interference in an untouched industry. Nevertheless, the recording of Bill Gates deposition in 1998 being released to the public was disastrous for the reputation of the Microsoft Founder. In 1998, the company and Gates appeared to have a dismissive high-brow attitude towards the legal proceedings which did not endear them to the public. Gates was seen as being evasive and flustered, far from the cool persona he had built. Zuckerberg could face similar scrutiny which may indirectly affect the use of the world's most used and most popular social media network.