Can WhatsApp be sued under the Competition Act

US lawsuitFacebook is to be split up

The judicial authorities of 48 US states and the US Federal Trade Commission (FTC) are calling for Facebook to be broken up. That is evident from lawsuits that have now been filed in the United States. In the past ten years, the group has acted in an anticompetitive manner, buying up competitors and restricting data access to Facebook's services for potential competitors.

“No company should have so much power over our personal information and social interactions,” said New York Attorney General Letitia James when announcing her lawsuit: “Today we are sending a strong message to Facebook and all other companies that we are on all attempts to compete to suffocate and harm small businesses, to reduce innovation and creativity or to curtail the protection of privacy, will react with the full force of our offices. "

Questionable takeovers, unfair practices

The lawsuits primarily relate to Facebook's acquisitions of Instagram in 2012 for $ 1 billion and WhatsApp in 2014 for $ 19 billion. Both services were in direct competition with Facebook. But instead of expanding its own photo apps and messaging services, Facebook bought the competition. As a result, Facebook now operates three of the largest social networks in the world.

Facebook denies any guilt in a statement. The success of companies like TikTok, but also Google, Twitter and Apple is proof that the company is still exposed to competition. "When we took over Instagram and WhatsApp, we were convinced that these companies would be of great use to our Facebook users," it says.

The opposite is apparent from emails unearthed at Mark Zuckerberg's hearings in July. Accordingly, the competition from Instagram was definitely a reason to buy for the Facebook boss.

The FTC lawsuit criticizes Facebook's approach of restricting its own interfaces for developers whose apps come too close to their own core business. For example, Facebook had turned off the option for the Vine video app to offer networking with Facebook friends within its service. As early as 2019, a leak in internal documents made it public that Zuckerberg was using internal data as leverage to take the wind out of the sails of competitors.

Competition Law in the 21st Century

The course of the wave of lawsuits, unprecedented in its scope, could mean a change in the interpretation of antitrust law. The United States has a history of tough competition law that goes back over a hundred years. Since the 1970s, however, more and more decisions have been made in favor of large amalgamations. The FTC also originally approved the takeovers of Instagram and WhatsApp. Penalties or even the smashing of Facebook, as the lawsuits demand, would be a clear warning in the direction of Google, Amazon, Apple and Co.

In Europe, too, voices have been loud for a long time that they want more regulation of tech companies. It was only in June that the Federal Court of Justice confirmed a ban by the Federal Cartel Office, according to which Facebook is abusing its dominant market position. The planned merger of all Facebook messenger services last year also caused frowns. During the takeover, Mark Zuckerberg had assured that he would never want to connect users: internal data from WhatsApp, Instagram and Facebook.

The lawsuits brought in the Washington DC Court now have a long way to go. The rare cross-party cooperation between almost all attorneys general in close collaboration with the FTC, however, suggests that one does not want to stop at a threat.

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About the author

Serafin thing

Serafin was an intern with us at the end of 2020 and has been producing our podcast once a month since then. He once studied literature and is just finishing his master's degree in cultural journalism at the Berlin University of the Arts. He also works as a programmer and on all kinds of podcasts. He's interested in almost everything anyway. But especially for the interfaces between culture, society and the digital. It can be reached encrypted and by email. More of him here or on Twitter.
Published December 10th, 2020 at 5:04 pm