During the Attorney General news conference of the antitrust lawsuit against Facebook (09/12/20) NY Attorney General Letitia James explained the potential harmful effect which could be caused by acquisitions made by Facebook. She announced that the acquisition of Instagram and WhatsApp reduced choices for consumers, restrained innovation and caused significant harm to the protection of privacy for millions of people. In order to impede competing services Facebook decided to implement a ‘buy or bury’ strategy — acquiring smaller or potential competitors before they could threaten the company’s dominance.
Instagram was bought by Facebook for $1 billion, which was a shocking sum given the fact that Instagram did not have even a dime of revenue at that time and that it had only thirteen employees. Today the company contributes over $20 billion to Facebook’s annual revenue.
Ian Conner, Director of the Federal Trade Commission’s Bureau of Competition, states that the FTC is aiming to inhibit or at least significantly slow down Facebook’s anticompetitive behaviour and rebuild competition with the objective of enabling free competition to thrive and innovation to develop.
Facebook defends itself claiming that all acquisitions in question were legal and cleared by regulatory agencies, highlighting that overturning them could be very dangerous and result in unpredictable consequences. There are also voices claiming that it could be simply too late to react on this matter, like the comment of Rep. Rep. Jerrold Nadler who said: “This should never have happened in the first place, and accountability is long overdue.”
Facebook is facing a situation where the FTC and over 40 states are seeking to break it up. The Facebook acquiring strategy is one of the new potential threats which modern society has to deal. It is as an effect of constant technology advancements and globalization. Many questions about privacy concerns cannot yet be answered and we can only try to predict potential results of actions taken by big tech companies.
Nevertheless, imposing a $5 billion fine on Facebook for mishandling user’s information by the FTC (2019) was severely criticised by not only the public, but also members of the agency’s board. We can assume that this explicit split is a result of not being aware of the potential consequences caused by creating a monopoly by a company which possesses vast amounts of our private data.
NY Attorney General news conference on antitrust lawsuit against Facebook:
The FTC is suing Facebook to unwind its acquisitions of Instagram and WhatsApp:
https://www.theverge.com/2020/12/9/22158483/facebook-antitrust-lawsuit-anti-competition-behavior-attorneys-general
Mark Zuckerberg bought Instagram as it was a ‘threat’ to Facebook:
https://www.business-standard.com/article/international/mark-zuckerberg-bought-instagram-as-it-was-a-threat-to-facebook-120073000324_1.html#:~:text=Facebook%20bought%20Instagram%20for%20%241,billion%20to%20Facebook’s%20annual%20revenue.
F.T.C. Approves Facebook Fine of About $5 Billion:
That is true that Facebook buys companies and tailors them to some particular standards and needs. And of course, these changes are sometimes too autocratic. However, I don’t really think Instagram And WhatsApp would have been succeeded if Facebook had not bought them.