DECEMBER 10, 2020 EFF TURNS 30 THIS YEAR! eff.

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Federal and State Antitrust

Suits Challenging
Facebook’s Acquisitions are
a Welcome Sight
Antitrust enforcers charged with protecting us from monopolists
have awoke from decades-long hibernation to finally address
something users have known, and been paying for with their
private data, for years: Facebook’s acquisitions of rival platforms
have harmed social media users by reducing competition, leaving
them with fewer choices and creating a personal data-hoovering
behemoth whose profiling capabilities only cement its
dominance.

These lawsuits, though they

won’t be easy to win, are a
welcome sight.
Now the government’s enforcers want Facebook broken up. The
company’s acquisitions of Instagram in 2012 and WhatsApp in
2014 are at the center of lawsuits filed yesterday by the Federal
Trade Commission (FTC) and forty U.S. states and territories that
accuse the giant platform of having and illegally maintaining
monopoly power in the “personal social networking” market.
Facebook CEO Mark Zuckerberg, the lawsuits allege, strategized
that it was better to buy rather than compete. Acquiring
Instagram and WhatsApp, the lawsuits allege, deprives social
media users of the benefits of competition—more choice,
quality, and innovation.
The suits also focus on how Facebook treats companies that want
to interoperate with its services. Facebook has long recognized
that the ability to interoperate with an incumbent platform is a
powerful anti-monopoly weapon. That’s why, say the lawsuits,
Facebook attaches conditions when it allows app developers to
use its APIs: they can’t provide services that compete with
Facebook’s functions, and they can’t connect with or promote
other social networks.

Spinning off Facebook’s

acquisitions could inject
competition into a field where
it’s been stifled for many years
now.
Like many antitrust suits, a key issue will be whether the court
accepts the governments' definition of the relevant market that’s
being monopolized. In other words, is “personal social
networking services" a unique type of service that Facebook
dominates? Or does Facebook compete head-to-head with
everything from email to television as one player among many?
That issue is sure to be hotly contested as the government and
states grapple with Facebook about what other companies are
part of the relevant market.  

Facebook will probably also argue that its acquisitions were good
for consumers and weren’t illegal from an antitrust standpoint
because, even if they gave the company market dominance, they
led to innovation that benefited users. Because no one can know
for sure what would have happened if Instagram and WhatsApp
had remained independent, Facebook will argue, the courts can
do nothing now.

Tell that to former Instagram and WhatsApp users who saw the
platforms they chose over Facebook be subsumed into Facebook’s
ecosystem. Those users thought their preferred network, and
their data, could be kept separate from Facebook’s; first because
they were actually separate, and then because Facebook told
them so, only to go back on its word, siphon o� their data, and
be opaque about the privacy implications to boot.
Antitrust regulators were mostly asleep at the wheel. Meantime,
Instagram users saw the Instagram Direct logo disappear and be
replaced with Facebook Messenger logo. Facebook continues to
blur the lines between the two apps, we noted last month, as part
of a broader plan to consolidate Instagram Direct, Facebook
Messenger, and WhatsApp. In a recent messaging “update,”
Facebook encouraged Instagram users take advantage of  new
“cross-platform messaging” features that in essence give you
Facebook Messenger inside Instagram. But hey, you get
innovations like colors in chats and new emojis.

Facebook will also have to defend its 2013 acquisition of VPN

maker Onavo, which was specifically called out in the states’
lawsuit. Onavo’s data-gathering features were billed as a way for
Facebook customers to keep their web browsing safe. But as it
turns out, Facebook was using Onavo to gather intelligence about
potential rivals by seeing how many messages users were
sending through WhatsApp, which is what led it to buy
WhatsApp. Facebook shut down the Onavo service after the
practice was revealed. Whoops.

The enforcers aren’t asking that Facebook pay damages in the

lawsuit. Rather, they want a court to require Facebook to divest
Instagram, WhatsApp and possibly other acquisitions, and to
limit the companies’ future mergers and acquisitions.

That’s the right approach. Even though company break-ups are

hard to achieve—the last significant technology company to be
broken up was AT&T in 1982—spinning o� Facebook’s
acquisitions could inject competition into a field where it’s been
stifled for many years now. Even the pursuit of a break-up and
restrictions on future mergers can create needed space for
competition in the future. That’s why these lawsuits, though
they won’t be easy to win, are a welcome sight.

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