FTC orders Facebook to get rid of WhatsApp and Instagram
The US regulator FTC and the state prosecutors of 46 U.S. states, the capital Washington and Guam accuse Facebook of an illegal monopoly on the social media market in two charges. To break this, the company would have to divest, among other things, its two main subsidiaries: Instagram and WhatsApp.
According to the FTC, there is a “systematic strategy” whereby Facebook could, by buying the two apps, prevent them from becoming a threat to the monopoly position of the social network. Facebook bought Instagram in 2012 for $ 1 billion, and WhatsApp, two years later, for $ 19 billion.
The reproach is that the dominance of Facebook causes consumers to have fewer choices, because competing apps are less successful in intervening and perhaps offering a better alternative. This also affects advertisers, who have less choice. Together with Google, Facebook is the largest online advertising network.
The FTC is going to ask an American judge to have Facebook clipped, as you can see in the indictment. This probably means a long legal battle, with the platform doing everything it can to prevent it from having to reject the two apps.
Both Facebook Instagram and WhatsApp are seen as essential elements of Facebook that in fact ensure the future of the company.
In addition, the FTC and the states demand, among other things, that Facebook should inform them in advance if it wants to take over a company in the future. Earlier this year, Facebook bought the GIPHY.
The steps that are being taken today are an important moment in the two major investigations by the parties into the dominant position of Facebook. The company has been under a magnifying glass for a long time. The fact that the FTC is now asking to divide up Facebook shows that there is a lot at stake. The US states are also alluding to the fact that Facebook is being cut up in their charges, but they are more vague about it.
“The most important fact in this case, which the committee does not mention in its 53-page charge, is that it approved these acquisitions years ago,” says Facebook’s Chief Legal Officer Jennifer Newstead in a response. “The government now wants to do this again, saying to American companies that a sale is not yet final.”
According to Newstead, consumers and businesses do not use the services because they have to, but because they provide the most value. “We are going to defend that choice vigorously.”