After prosecutors from 46 US states and counties as well as the Federal Trade Commission has filed lawsuits against the Blue site over its strategy to capture competitors, Facebook may be forced to sell WhatsApp and Instagram.
The complaints accuse Facebook of buying competitors, focusing on previous acquisitions of the photo-sharing app Instagram in 2012 and WhatsApp’s messaging app in 2014.
Federal regulators said the acquisitions should be canceled, a move likely to raise a drawn-out legal challenge as the US Federal Trade Commission approved the deals years ago.
“For nearly a decade, Facebook has used its dominance to crush smaller competitors and eliminate competition, at the expense of ordinary users,” said New York Attorney Letitia James, on behalf of a coalition of 46 states.
Facebook’s general counsel, Jennifer Newstead, described the lawsuits as trying to reinterpret the historical narrative and said, “Antitrust laws do not exist to punish successful companies.”
She added, “WhatsApp and Instagram have succeeded after Facebook invested billions of dollars in developing applications, and the government now wants to try again to do what it failed to do last time while sending a warning to American companies that there is no final sale at all.”
Newstead also raised doubts about the alleged damages, arguing that consumers had benefited from the decision to make WhatsApp free and that competitors, such as YouTube and Twitter, had achieved good results without access to its developer platform.
CEO Mark Zuckerberg told staff he did not expect any impact on individual teams or positions due to the lawsuits, which he said were one step in a process that could take years to finish fully.
In July, Zuckerberg told employees that Facebook was ready to take on the legal challenge to untangle it, describing it as an existential threat.
Although attempts at dismantling are rare, some antitrust experts have said the issue is powerful, given Zuckerberg’s earlier statements, such as saying in 2008 via email: Better to buy than to compete.
Other experts said that the FTC’s lawsuit is much weaker than the Justice Department’s lawsuit against Google, and we’re talking about six or eight-year-old acquisitions, and it’s hard for the court to order the investment split up.