Forty-eight are suing over monopoly problems with the social networking giant.
COLUMBUS – Ohio Attorney General Dave Yost, along with 48 attorneys general, has filed a lawsuit against Facebook Inc. alleging the company is harming the public by illegally suppressing competition to protect its monopoly power.
The lawsuit alleges that for the past decade, the social networking giant has illegally acquired competitors and ceased services to smaller businesses that threatened its power, deprived users of competitive advantage and privacy this way – all in one effort to increase bottom line through higher advertising revenue.
“The untested power of Facebook has taken an alarming level of control over what we see, say, buy and even who our friends are,” Yost said in a press release. “It is a dangerous seduction when we as consumers have become Facebook’s product by controlling so many aspects of our lives.”
Since 2004, Facebook has been a personal social networking service that makes it possible to share content online with friends and family without users having to pay a monetary fee. Instead, these services are provided in exchange for a user’s time, attention, and personal information.
Facebook monetizes its business by selling advertising to companies that place immense value on user engagement. Facebook is able to deliver targeted advertising because of the huge amount of data it collects about users, their friends, and their interests.
In order to maintain its dominance on social networks, Facebook uses a variety of methods to impede competing services and – as Chairman, Chief Executive Officer and majority shareholder Mark Zuckerberg put it – to build a “competitive moat” around the company.
The two most commonly used strategies were attracting smaller and potential competitors before they could compromise Facebook’s dominance, and choking and crushing third-party developers who Facebook invited to use its platform if they showed signs of being on the Market gain a foothold.
As one market participant noted, Zuckerberg would go into “destroy mode” and expose small businesses to the “wrath of Mark” if an application tampered with Facebook’s turf or did not consider selling it.
Facebook is specifically charged with violating Section 2 of the Sherman Act, in addition to two violations of Section 7 of the Clayton Act.
The complaint was filed in the US District Court for the District of Columbia.
Separately, but in coordination with the coalition of several states, the Federal Trade Commission filed a complaint against Facebook with the US District Court for the District of Columbia. The lawsuit is led by New York Attorney General Letitia James and an executive committee comprised of attorneys general from California, Colorado, Florida, Iowa, Nebraska, North Carolina, Ohio, Tennessee, and the District of Columbia.
States are calling on the court to stop Facebook’s illegal, anti-competitive behavior and prevent the company from continuing this behavior in the future.
Additionally, states are asking the court to prevent Facebook from making any further acquisitions worth $ 10 million or more without giving notice to the plaintiff states.
Finally, the court is asked to grant any additional relief it deems appropriate.
Reduced data protection and fewer options
Facebook’s monopoly gives it a wide discretion to determine the conditions for collecting and using its users’ private information to advance its business interests.
When Facebook cuts off integration with third party developers, users can add their own information – such as: B. Their friend lists – do not just move them to other personal social network services. This decision forces users to either stay tuned or start their online life from scratch if they want to try an alternative.
If users get stuck, the company can decide how to curate content on the platform and use the personal information collected from users to further the business interests, even if those decisions are contrary to the interests and preferences of the Facebook Users stand.
While consumers initially turned to Facebook and other company’s apps for privacy and control over their data – Facebook’s “secret sauce” – many of those protections have now been removed.
Because of Facebook’s large user base and the enormous amount of data Facebook collects from its users and user connections, Facebook can sell targeted advertising that companies value.
The volume, speed and variety of Facebook’s user data provide an unprecedented, near-360-degree view of users and their contacts, interests, preferences and activities.
The more users Facebook can attract and convince them to spend extra time on its platforms, the more data Facebook can collect by monitoring the activities of its users and thereby increasing its revenue through advertising – the company can earn billions every month.
Acquiring Competitive Threats
As set out in the complaint, states argue that Facebook is targeting competitors with a “buy or bury” approach that has been successful in buying Instagram and WhatsApp.
When competing platforms refuse to be bought out, Facebook tries to squeeze them.
Facebook also uses unique data collection tools to monitor new apps and determine what is gaining momentum among users.
This data helps Facebook select acquisition targets that most threaten Facebook’s dominance. Once selected, Zuckerberg and Facebook are offering huge sums of money to the heads of these companies that will add significant value to the apps in the hopes of avoiding any competition for Facebook in the future.
In the case of startups, Zuckerberg found that if these companies were not inclined to sell, they would “have to think about” if Facebook offered a “sufficiently high price”.