January 17, 2020

Competitors sue Facebook alleging anti-competitive behavior; want Zuckerberg to sell majority stake

[ by Kavita Krishnan ]


Describing Facebook as one of the largest monopolies in the United States, Facebook Inc was sued by its competitors accusing the social media giant of anti-competitive behavior.

The companies approached a Court seeking an order requiring Facebook Chief Executive Officer (CEO) Mark Zuckerberg to give up control of the social media behemoth.

The companies feared that Facebook isn’t forced to sell its WhatsApp and Instagram assets, it’ll integrate them into the social network. According to them, this would consolidate its market power across the globe, likely permanently foreclosing competition in the relevant markets for decades to come.

The lawsuit was filed on January 16, 2020 in San Francisco by Reveal Chat HoldCo LLC; USA Technology and Management Services Inc., better known as the credit and financial service provider Lenddol; former peer-to-peer site Inc.; and former identity verification provider Beehive Biometric Inc.

The aim of the lawsuit, according to the companies, was to halt the willful anti-competitive scheme. The suing companies were of the opinion that getting Mark Zuckerberg to divest is essential to get Facebook to cease its anticompetitive behavior.

Both the Justice Department and the Federal Trade Commission, which share a mandate to enforce antitrust laws, have announced that they would reviews the technology sector broadly and also indicated that both the agencies would carry out an investigation on Facebook.

The allegations in the law suit also mention that Facebook opened its platform to developers when it needed their assistance to catch up in the early 2010s to the fast-growing mobile market and then gave many of them the boot when it no longer needed them or started to see them as rivals.

Allegedly, Facebook cut off many developers’ access to user data, rendering their apps useless and forcing some out of business.

Facebook responded by saying that in a competitive environment people and advertisers have multiple choices. The social media giant said that in the current environment, claims like these aren’t unexpected but they are without merit.

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