US federal regulators and over 45 state prosecutors have sued Facebook, accusing the social network of abusing its market power.
The lawsuit, which could see the tech giant divested of Instagram and the WhatsApp messaging service, is one of the most significant legal actions the company has faced.
The antitrust complaints were announced on Wednesday by the Federal Trade Commission (FTC) and New York Attorney General Letitia James.
“It’s really critically important that we block this predatory acquisition of companies and that we restore confidence to the market,” James said during a press conference on Wednesday.
The FTC has said that Facebook has engaged in a “systematic strategy” to eliminate competition by purchasing smaller rivals.
Facebook said the lawsuit was “revisionist history”.
The tech giant purchased the photo-sharing app Instagram in 2012 and the messaging platform WhatsApp in 2014.
“This course of conduct harms competition, leaves consumers with few choices for personal social networking, and deprives advertisers of the benefits of competition,” the FTC said in a statement.
The authority confirmed that would ask for the company to divest its assets and be prohibited from imposing anticompetitive conditions on software developers
Future mergers and acquisitions ‘must be approved’
The FTC is also requesting that Facebook must seek prior notice and approval for future mergers and acquisitions.
“Personal social networking is central to the lives of millions of Americans,” said Ian Conner, Director of the FTC’s Bureau of Competition.
“Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive.”
Letitia James added that Facebook had “used its monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users”.
In a blog post, Facebook said they were reviewing the complaints and release a further statement soon.
“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,” the company stated.
The tech giant came under intense scrutiny from the FTC when the deals for Instagram and WhatsApp were done and were initially cleared. But a new investigation into the potential antitrust violations was launched in 2019.
Facebook vice president Jennifer Newstead said the Wednesday’s lawsuit risked warning American businesses that “no sale is ever final”.
“Antitrust laws exist to protect consumers and promote innovation, not to punish successful businesses,” she said.
“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.”
Facebook Chief Executive Mark Zuckerberg defended the acquisitions this summer, saying that the tech giant had helped them expand from smaller companies into industry giants. Zuckerberg has also argued that Facebook has a range of significant other competitors.
Facebook is the world’s biggest social network with 2.7 billion users and an estimated market value of nearly $800 billion (over €662 billion).
The legal challenges come as a growing number of US lawmakers are arguing that companies like Google, Facebook, and Apple have become too powerful.