Facebook on Wednesday came out guns blazing after the Federal Trade Commission hit the company with an antitrust lawsuit ordering the divestment of Instagram and WhatsApp — two acquisitions that the commission had previously approved.
“This is revisionist history,” Jennifer Newstead, Facebook VP and general counsel, said in a statement. “Antitrust laws exist to protect consumers and promote innovation, not to punish successful businesses. Instagram and WhatsApp became the incredible products they are today because Facebook invested billions of dollars, and years of innovation and expertise, to develop new features and better experiences for the millions who enjoy those products. The most important fact in this case, which the commission does not mention in its 53-page complaint, is that it cleared these acquisitions years ago.”
Earlier on Wednesday, the FTC ordered Facebook to divest Instagram and WhatsApp — two acquisitions that the commission had signed off on in 2012 and 2014, respectively. In addition, the company was hit with a separate antitrust suit from 48 state attorneys general, led by New York’s Letitia James.
“The FTC is seeking a permanent injunction in federal court that could, among other things: require divestitures of assets, including Instagram and WhatsApp; prohibit Facebook from imposing anticompetitive conditions on software developers; and require Facebook to seek prior notice and approval for future mergers and acquisitions,” the FTC said.
The FTC had previously approved Facebook’s 2012 acquisition of Instagram for $1 billion; as well as the company’s $19 billion deal for the popular messaging service WhatsApp two years later.
In its lawsuit, the FTC accuses Facebook of “illegally maintaining its personal social networking monopoly through a years-long course of anticompetitive conduct.”
“Personal social networking is central to the lives of millions of Americans,” said Ian Conner, Director of the FTC’s Bureau of Competition. “Facebook’s actions to entrench and maintain its monopoly deny consumers the benefits of competition. Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive.”
In response, Facebook said the FTC’s claims were bogus and that it fails to realize Facebook is now worth $800 billion because users, advertisers, and businesses love its network of apps, not because it broke any rules.
“The government now wants a do-over, sending a chilling warning to American business that no sale is ever final,” Newstead added. “People and small businesses don’t choose to use Facebook’s free services and advertising because they have to, they use them because our apps and services deliver the most value. We are going to vigorously defend people’s ability to continue making that choice.”
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