After months of speculation about whether the US Federal Trade Commission (FTC) would go after Facebook, the hammer dropped last night. The FTC has sued Facebook “alleging that the company is illegally maintaining its personal social networking monopoly through a years-long course of anticompetitive conduct” in the words of its announcement.
“The complaint alleges that Facebook has engaged in a systematic strategy – including its 2012 acquisition of up-and-coming rival Instagram, its 2014 acquisition of the mobile messaging app WhatsApp, and the imposition of anticompetitive conditions on software developers – to eliminate threats to its monopoly.”
The FTC is seeking measures that could include selling Instagram and WhatsApp, and forcing Facebook to seek prior approval for future acquisitions. A group of 48 attorneys general from the US are involved in the lawsuit, and they’re talking tough. For example: “Instead of competing on the merits, Facebook used its power to suppress competition so it could take advantage of users and make billions by converting personal data into a cash cow,” said New York attorney general Letitia James.
Facebook has been preparing for this moment for some time, of course, and the statement by its VP and general counsel Jennifer Newstead was just as blunt. “The most successful platforms mature and adapt to people’s changing preferences. Our products became and remain popular for this very reason,” she said. “We constantly evolve, innovate and invest in better experiences for people against world-class competitors like Apple, Google, Twitter, Snap, Amazon, TikTok and Microsoft.”
Facebook is describing the lawsuit as “revisionist history”, noting that the Instagram and WhatsApp acquisitions were “reviewed by relevant antitrust regulators at the time” – the FTC and the European Commission respectively. “In addition to being revisionist history, this is simply not how the antitrust laws are supposed to work,” claimed Newstead. “No American antitrust enforcer has ever brought a case like this before, and for good reason… Now the agency has announced that no sale will ever be final, no matter the resulting harm to consumers or the chilling effect on innovation.”
There are many rounds to go in this battle, and while it’s not a music industry story specifically, the fate of Instagram is important to our world, as are the knock-on implications for any future Facebook expansion into music through acquisitions. The big technology companies with music services will be watching closely, as will Spotify.