State AGs file Facebook antitrust lawsuit targeting Instagram, WhatsApp purchases

Lawsuit to accuse Facebook of buying out competitors, leaving fewer alternatives

A group of 48 state attorneys general filed an antitrust lawsuit against Facebook Wednesday in a bid to curtail what they described as the company’s “illegal monopoly” over the social media industry.

The bipartisan coalition is led by New York Attorney General Letitia James, who detailed the lawsuit’s aims at a press conference. The lawsuit accuses Facebook of using its vast wealth to acquire rival social media platforms capable of challenging its dominance and of utilizing third-party developers to build its own user base, only to shut down those that became threats to its business.

“For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users,” James said at the press conference.

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James noted that Facebook acquired Instagram for $1 billion “when the company did not even have a cent in revenue” and argued that its purchase of WhatsApp for $19 billion was far beyond what industry analysts deemed to be market value for the messaging app. The attorneys general claim Facebook’s business practices are predatory and anti-competitive in nature.

"This is revisionist history," Facebook Vice President and General Counsel Jennifer Newstead said in a statement to Fox News. "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 New York attorney general also pointed to Facebook’s access to the personal data of billions of users as grounds for antitrust action.

“No company should have this much-unchecked power over our personal information and social interactions,” James said.

The Federal Trade Commission launched its own antitrust suit against Facebook on Tuesday, calling for the company’s acquisitions of Instagram and WhatsApp to be unwound. James said the coalition of attorneys general would coordinate with the FTC on ongoing legal action.

Newstead said that the "most important fact in this case" is that the FTC "cleared these acquisitions years ago."

"The government now wants a do-over, sending a chilling warning to American business that no sale is ever final. 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," she said.

Lawmakers have previously pressed Facebook on its 2012 and 2014 purchases of Instagram and WhatsApp, respectively, which the Federal Trade Commission (FTC) vetted at the time. Facebook CEO Mark Zuckerberg and the company's lawyers have previously defended the company's purchases of WhatsApp and Instagram.

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"I don't think we or anyone else viewed Instagram as a competitor -- as a large, multi-purpose social platform," Zuckerberg said during a November censorship hearing before the Senate Judiciary Committee. "In fact, at the time, people at the time kind of mocked our acquisition because they thought that we dramatically spent more than we should have on something that was ... primarily a photo and camera-sharing app."

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James is leading the bipartisan charge, which was first announced in September 2019 and expanded to include 40 attorneys general in October of last year.

Facebook paid a $5 billion fine to the FTC in July of 2019 over its privacy and data practices following the Cambridge Analytica scandal that came after the 2016 U.S. presidential election. The FTC also opened an investigation into the company's antitrust practices in June 2019, and the Justice Department announced a month later that it would be conducting an antitrust review of the tech giant.

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The social media platform has also faced probes into its anticompetitive behavior in Canada and Europe.

Since Facebook was launched in 2004, it has created an online user marketplace with its own checkout process, a similar marketplace on Instagram for businesses, its own gaming community, a short-video feature rivaling TikTok on Instagram and its own line of smart devices that work with Amazon's Alexa. Facebook also briefly considered introducing its own cryptocurrency called Libra in 2019.

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Fox News' Jake Gibson contributed to this report.