New York attorney general leads 48 states in launching massive antitrust suit against Facebook that seeks to split up the company by forcing it to sell Instagram and WhatsApp
The attorney general of New York has filed a massive antitrust lawsuit against Facebook, seeking to force a divestiture of acquisitions such as Instagram and WhatsApp.
The suit filed on Wednesday in U.S. District Court for the District of Columbia is spearheaded by New York Attorney General Letitia James, and joined by 47 other state attorneys general.
The lawsuit alleges that, over the last decade, Facebook illegally acquired potential competitors in a predatory manner in order to dominate the market, and seeks to potentially split up the company by unwinding those deals.
Facebook blasted the litigation in a statement, saying: ‘Years after the FTC cleared our acquisitions, the government now wants a do-over with no regard for the impact that precedent would have on the broader business community or the people who choose our products every day.’
‘We’re reviewing the complaints & will have more to say soon,’ the company said.
Facebook CEO Mark Zuckerberg
Separately, the Federal Trade Commission filed a complaint against Facebook, in coordination with James and the other states.
‘For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users,’ said James, a Democrat, in a statement.
‘Today, we are taking action to stand up for the millions of consumers and many small businesses that have been harmed by Facebook’s illegal behavior,’ added James.
The states’ 123-page complaint specifically focuses on two massive Facebook acquisitions: that of Instagram in 2012 for $1 billion, and of WhatsApp in 2014 for nearly $19 billion.
The suit accuses Facebook and CEO Mark Zuckerberg of using acquisitions to gobble up smaller competitors — and when that fails, using market dominance ‘to suffocate and squash’ rivals.
‘Facebook targets competitors with a ‘buy or bury’ approach: if they refuse to be bought out, Facebook tries to squeeze every bit of oxygen out of the room for these companies,’ the New York attorney general’s office said in a statement.
New York Attorney General Letitia James led the coalition of 48 states in the lawsuit
On the Instagram acquisition, the suit alleges that Zuckerberg admitted, in early 2012, that Facebook was ‘very behind’ Instagram and a better strategy would be ‘to consider paying a lot of money’ for the photo-sharing app in an effort to ‘neutralize a potential competitor.’
Facebook acquired Instagram for $1 billion, despite the company having no revenue and valuing itself at only $500 million, according to the complaint.
Zuckerberg offered Instagram’s owners double the valuation that Instagram came up with even though Zuckerberg previously told a Facebook investor that the initial $500 million value as ‘crazy,’ the complaint states.
The suit asks the court to restrain Facebook from making further acquisitions valued at or in excess of $10 million without advance notice to the plaintiff states.
It also asks the court for ‘any additional relief it determines is appropriate,’ including the divestiture or restructuring of ‘illegally acquired companies.’
Developing story, more to follow.