The Industry

How Facebook Tried to Make Itself Antitrust-Proof

The company has been preparing for war with regulators for years.

Facebook CEO Mark Zuckerberg testifies via video conference.
This is his war face. GRAEME JENNINGS/AFP via Getty Images

The U.S. government wants to break up Facebook—and Facebook has spent years barricading its bunker for the fight.

On Wednesday, the Federal Trade Commission filed a suit against the tech giant, alleging that it has been illegally functioning as a monopoly and engaging in anticompetitive behavior in order to maintain its dominance in the social network industry. The FTC cites Facebook’s 2012 acquisition of Instagram, 2014 acquisition of WhatsApp, and restrictions on software developers as instances of monopolistic behavior that has smothered potential competitors. “Today’s enforcement action aims to restore competition to this important industry and provide a foundation for future competitors to grow and innovate without the threat of being crushed by Facebook,” Ian Conner, the director the FTC’s Bureau of Competition, said in a statement. The commission is seeking a permanent injunction that would require Facebook to spin off Instagram and WhatsApp and discontinue policies that cut off API access to developers seen as building competitive software products.

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The FTC’s Republican chairman and two Democratic commissioners voted in favor of proceeding with the suit, while the two remaining Republican commissioners voted against it. The suit comes after an investigation that the FTC conducted for more than 18 months in conjunction with the attorneys general of 46 states, D.C., and Guam. That coalition of state regulators, led by New York Attorney General Letitia James, has filed a separate lawsuit also alleging that Facebook has illegally maintained monopoly power. This comes mere weeks after the Department of Justice filed an antitrust lawsuit against Google in October. (Facebook announced that it would be buying Kustomer, a customer-service platform, for $1 billion just last week.)

“Years after the FTC cleared our acquisitions, the government now wants a do-over with no regard for the impact that precedent would have on the broader business community or the people who choose our products every day,” Facebook’s PR team wrote in a tweet. The FTC approved Facebook’s purchases of WhatsApp for $19 billion and Instagram for $1 billion during the Obama administration. Facebook’s acquisition of the two platforms has been hugely profitable for the company, which has a billions of users across its products, though executives have argued that the emergence of TikTok (which has 980 million monthly active users) and Parler (an upstart platform appealing to conservatives that has 8 million users) proves that there is plenty of competition in the social media space. Still, the FTC indicated in its complaint that investigators had amassed a substantial amount of evidence to back up its allegations, including Facebook’s attempted acquisitions of Twitter, testimony from competitors like Snapchat, and a wealth of internal emails. In one of those emails, from 2008, CEO Mark Zuckerberg wrote, “it is better to buy than to compete.”

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Facebook seems to have been gearing up to face a campaign to break it up into its constituent parts. Last year, Zuckerberg described a potential antitrust showdown with the government as an “existential” threat and promised, “you go to the mat and you fight.” The company has taken steps in recent years to more closely integrate its subsidiaries into its main product, the Facebook platform, which makes it even more complicated to try and disentangle the acquisitions. In 2019, Zuckerberg reportedly began making it a priority for Facebook to unify the underlying infrastructure of WhatsApp, Instagram, and Facebook Messenger, allowing users to  communicate with each other across platforms. The move would consolidate Zuckerberg’s power over the various components of the company and ensure that users remained engaged within the Facebook ecosystem. For instance, one engagement strategy was to have buyers and sellers on Facebook Marketplace communicate with each other via WhatsApp. The more interlocking these services become, the harder it will be to separate them out. In September, Facebook made some much-publicized updates that were a part of this integration mission, such as providing Instagram users with the ability to chat with each other with Messenger and creating the Accounts Center, which allows people to change settings and put up posts across Facebook, Messenger, and Instagram. Notably, when you load up WhatsApp and Instagram, a line of text reads, “From Facebook.”

Zuckerberg has also been notorious for allegedly clashing with the leaders of the companies it acquires, supposedly by interfering in their affairs and making them feel suffocated. The founders of Instagram and WhatsApp reportedly left their companies partly for this reason. Dozens of WhatsApp developers also quarreled with Zuckerberg in 2019 over the integration plans, fearing that the modifications would threaten user privacy in the name of tying the company’s platforms closer together. Now we just may see how tightly they’ll hold.

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