Saturday, Jan 02, 2021, 15:07 Events

Will Facebook and WhatsApp be Broken up? New FTC Lawsuit

Many were astonished when Facebook set out to purchase WhatsApp for $19 billion USD almost 7 years ago. The purchase was regarded as nonsensical at the time, $19 billion dollars for WhatsApp? Although a successful enterprise, $19 billion USD seemed to be a bit too much. However, WhatsApp developments over time and since the purchase have provided support for Facebook’s assessment of WhatsApp’s worth. The FTC has recently announced a new lawsuit against Facebook—supported by all but 4 States in the US. At the center is the accusation that Facebook has actively pursued and nourished the development of a monopoly—with WhatsApp playing a role as a central example.

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The Legal Case for WhatsApp
When Facebook purchased WhatsApp, there were were concerns within Facebook that Facebook Messenger could one day become a problem for the company. Despite this, Facebook executives saw a potential opportunity to draw more users to their own services. The situation was quite similar to one 2 years prior, when Facebook scooped up Instagram for $1 billion USD. Facebook’s acquisition of Instagram ensured that many of the younger users of Facebook who had migrated to Instagram remained within the company.

The FTC’s Motivation
An explicit explanation for the lawsuit is found on the FTC’s own site—“Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive.” Facebook’s acquisition of WhatsApp is used as a concrete example of an “anti-competitive acquisition.” It’s crystal clear that the FTC is keen on separating Facebook and the messaging service. Should the lawsuit prove successful, it would result in a forced sale of WhatsApp, effectively breaking up the two companies—a path which the US Congress had proposed a few months ago.

The Legal Case for Instagram
The FTC’s assessment of Facebook’s acquisition of Instagram in 2012 is much the same, and considered the purchase to be “the acquisition of an up-and-coming rival.” Instagram served an existential threat to Facebook and Facebook purchased Instagram to minimize competition.

Locking out the Competition
The lawsuit doesn’t only mention large purchases of the competition, but also takes a closer look at some of the design choices behind Facebook’s own service. For example:
Facebook only allows developers access to essential interfaces after they declare that they aren’t developing or advertising and any competing kind of service. A concrete example of this in action occurs in the form of Facebook’s reaction to their competitor, Twitter’s release of the service “Vine.” Facebook removed Vine developers’ access to the required API that enabled the service to send videos to Facebook friends.

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