Facebook may be forced to sell Instagram and WhatsApp over abuse of power

Facebook has become the subject of US federal lawsuits for allegedly violating anti-trust laws and exhibiting anti-competitive behaviour.

The social media mega-corp is facing two separate lawsuits in the US which accuse it of abusing its power by buying up competition. The suits demand that it sells off giant “family members” WhatsApp and Instagram.

Not so long ago when scrappy start-up Facebook replaced Myspace in the affections of the cyber-going public, it was mostly about posting pictures of cute kids, cuddly cats and your dinner.

It has since grown into a vast sprawling octopus of a conglomerate which many feel now threatens the American sense of fair play in business.

Facebook is accused of breaking competition law by suppressing innovation, cutting privacy protections for users of its platforms and monetising data, according to New York’s attorney-general, Letitia James.

“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,” she said.

“Facebook’s predatory acquisition of companies has sapped confidence in the market, and the lawsuit will ask that Facebook’s acquisitions of Instagram and WhatsApp be judged illegal.”

Mark Zuckerberg’s company bought Instagram in 2012 for US$1 billion and WhatsApp two years’ later for US$19 billion, purchases which have helped Facebook dominate the social media world ever since and seen its value skyrocket to US$800 billion on a good day.

In response, Facebook said it was reviewing the complaints but added it was clear that the lawsuit showed “no regard for the impact that precedent would have on the broader business community or the people who choose our products every day”.

US technology stocks have largely enjoyed a boom in their market values this year with investors correctly betting such companies would be immune to Covid-19 disruption and would benefit from people working from home and shopping online.

But the sector’s success has been met with increased scrutiny over the giant companies’ behaviour both at home and abroad.

In October, the US Department of Justice sued Google claiming it had abused its market power to fend off rivals.

And now Google and digital advertising firms are the targets of fresh privacy complaints filed in six EU countries on Thursday over the way they sell ads to potential advertisers through complex bidding processes.

Real-time bidding systems are based on collecting people’s browsing history, which may reveal intimate personal data, which are then broadcast to hundreds or thousands of companies so they can auction and place ads.

As in so many of these systems, the user’s consent is not sought.