Facebook, the largest social media company in the world, is facing both federal and state antitrust lawsuits for alleged anti-competitive business practices. The lawsuits allege that the social media giant has abused its influence in the market to choke out competition and keep itself dominant in the tech industry. If the lawsuits are successful, it could force the company to divest itself of some of its assets, including other social media platforms it has acquired over time.
What is Antitrust Law?
Antitrust law is the area of law that governs the ability of businesses to expand their own share of the market. More specifically, it is meant to counter certain business practices that can make it harder for other businesses to fairly compete on the open market. It is also meant to prevent any one company from monopolizing the market, which could allow them to exert extraordinary control over the prices of goods and services within their industry, irrespective of supply and demand.
Why is Facebook in Trouble?
Facebook is facing allegations that it has engaged in anti-competitive business practices, particularly with respect to its acquisition of other social media companies such as Instagram and WhatsApp. The lawsuits against it allege that by acquiring these companies, it has created a nearly unbreakable stranglehold on social media, using its vast financial resources and the troves of data it collects to stifle competition. They also allege that the company has intentionally used its wealth and influence to eliminate potential competitors by making sure their products were incompatible with its massive platform.
Facebook has responded to the allegations by stating that each of the acquisitions brought up in the lawsuit were approved by the Federal Trade Commission (FTC), which is the agency spearheading the federal antitrust suit. In a message sent out on the company’s official Twitter account, it said: “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.” In other words, regulators did not attempt to block them from acquiring these companies, so they see these lawsuits as an attempt to turn back the clock.
What Will Happen if the Lawsuits are Successful?
If these lawsuits are successful in proving that Facebook engaged in anti-competitive practices in violation of antitrust law, the company could face a number of potential legal consequences. Most significantly, the government could force Facebook to divest itself of the various companies it has acquired over the years, depriving them of both the revenue those services gave them and the technology used to power those services. It could also potentially splinter their audience, which collectively constitutes more than three billion people across all of their services.
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