Economy Regulators and US states denounce Facebook and ask to...

Regulators and US states denounce Facebook and ask to separate it from WhatsApp and Instagram

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The Federal Trade Commission of the United States in conjunction with a coalition of prosecutors from 46 states of the country has filed a lawsuit this Wednesday

Facebook, the social media giant that accounts for 70% of that market in the United States, today encountered the biggest threat in its history as a company since Mark Zuckerberg founded it at Harvard University 16 years ago: two lawsuits, one from the Federal Telecommunications Commission – the US competition regulator – and another from 48 states accusing her of systematically violate the rules of the free market and clearly raising the possibility of leaving the company for the first time.

The lawsuits, on which the Justice must rule, are one more step in the growing popular pressure towards large internet groups that operate under virtual monopoly conditions in markets that were so recently created that they have no regulation. In October, a similar process was initiated against Google, Alphabet’s Internet search service, which controls 89% of the market in the US and 92% in Europe. Other companies that have sparked controversy have been Apple, for the practices of its app store, Apple Store, and Amazon, for its massive dominance of the online retail market.

In the case of Facebook, the complaints are for known reasons. On the one hand, it is the Mark Zuckerberg-owned firm’s practice of buying off potential rivalsso, in the words of the Federal Telecommunications Commission (FTC, for its acronym in English), “a systematic strategy (…) to eliminate threats to its monopoly”, which concludes its acquisition of Instagram and Whatsapp for 1,000 and 19,000 million dollars (830 and 15,750 million euros) in 2012 and 2014, respectively..

The second leg of the argument used against Facebook is the accusation of employing practices designed to harm apps that use its platform and that they could end up being competitors. That is a criticism similar to the one launched in the process against Google, and that could also be applied against Amazon, for the treatment it gives to other companies that use its platform to sell on the internet.

None of these initiatives acts in relation to the accusations made against the great internet giants of use information of its users without their authorization, or to use what Dipayan Ghosh, Harvard University Shorenstein Center, qualifies as “algorithmic profit maximization”. What we are dealing with is allegedly more traditional anti-competitive practices, which were already used successfully by companies such as Rockefeller’s Standard Oil in the 19th century, to destroy new players in newly created markets. The key is in what it says Ian Conner, the director of the FTC’s Office of Competition in one of the lawsuits, “Facebook’s actions to ‘entrench’ and maintain its monopoly denies consumers the benefit of free competition.”

The two disputes overlap. But, as he declared yesterday at a press conference Letitia James, the attorney general – a position equivalent to that of Minister of Justice in Spain – of the state of New York, Such duplication is necessary because of the US federal system, which provides considerable regulatory capacity to the states.

These cases will presumably take years to resolve. The last major US antitrust operation against a company was in the 1990s when the Bill Clinton government launched a similar initiative against Microsoft. On that occasion, the litigation ended when the company founded by Bill Gates it agreed to a series of government measures to separate its different products and services, so that these could be used individually and not exclusively as part of the company’s operating systems.

According to some, that agreement was one of the keys that allowed the subsequent expansion of Google and other large companies Internet like Facebook that are now precisely in the target of the regulators.

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