Facebook ‘abuse of power’ lawsuits call for it to sell off WhatsApp and Instagram
Facebook is facing two separate lawsuits in the US which accuse it of abusing its power and demand that it sells off WhatsApp and Instagram.
The US Federal Trade Commission (FTC) and a coalition of US states are suing the social network firm on the grounds it has employed a “systematic strategy” to eliminate its competition.
Facebook is accused of breaking competition law by suppressing innovation, cutting privacy protections for users of its platforms and monetising data, according to New York’s attorney general, Letitia James.
She said its “predatory acquisition” of companies had sapped confidence in the market and the lawsuit it had brought with 45 other states and three districts would ask that Facebook’s acquisitions of Instagram and WhatsApp be judged illegal.
The federal case is seeking an injunction that “could, among other things: require divestitures of assets, including Instagram and WhatsApp”.
Mark Zuckerberg’s company bought Instagram in 2012 for $1bn and WhatsApp two years’ later for $19bn.
Ms James told reporters she hoped to collaborate with the FTC in the legal process.
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In response, Facebook said it was reviewing the complaints but added it was clear that there was “no regard for the impact that precedent would have on the broader business community or the people who choose our products every day”.
Shares fell 3% on news of the lawsuits.
US technology stocks have largely enjoyed a boom in their market values this year – with investors betting on such companies being immune to COVID-19 disruption and benefiting from it as people work from home and shop more online.
Facebook shares are up by over a third in the year to date, giving it a market cap of $800bn (£600bn).
But the sector’s success has been met with increased scrutiny over companies’ behaviour both at home and abroad.
In October, the US Justice Department sued Google claiming it had abused its market power to fend off rivals.
It is understood that, like in Facebook’s case, US states are set to launch a separate case against Google.