In case you haven’t noticed, Facebook has been growing at an exponential rate over the last decade. This growth has caught the attention of the Federal Trade Commission (FTC) which resulted in a lawsuit against the social media giant. The Silicon Valley-based social media network is considered a monopoly by FTC and the FTC deems Facebook’s actions illegal.
This identification of Facebook as a monopoly should come as no surprise to those familiar with Facebook’s growth method through the acquiring of emerging competitors. Here’s a bit about what the FTC had to say:
"Following a lengthy investigation in cooperation with a coalition of attorneys general of 46 states, the District of Columbia, and Guam, the complaint alleges that Facebook has engaged in a systematic strategy - including its 2012 acquisition of up-and-coming rival Instagram, its 2014 acquisition of the mobile messaging app WhatsApp, and the imposition of anticompetitive conditions on software developers - to eliminate threats to its monopoly. 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 believes that Facebook is continually snuffing out any competition through its growth strategy by purchasing any emerging companies. While Facebook’s largest growth in terms of product offering happened in the earlier half of the 2010s, Facebook hasn’t always been successful in its scaling methods.
Facebook’s attempts to grow since the acquisitions of Instagram and WhatsApp
Facebook has attempted to buy companies such as Snapchat and has even copied key features of Snapchat in order to compete as much as possible in the social media market. Facebook has also tried to affect TikTok’s ability to grow in the US market by working with US senators to spur concerns about the Chinese government’s involvement with TikTok. Despite Facebook’s involvement in the growth of Snapchat and TikTok, both Snapchat and TikTok have continued to grow and thrive in the US market.
Facebook’s response
In an official response to the FTC lawsuit, here’s what Facebook has to say:
"This lawsuit risks sowing doubt and uncertainty about the US government’s own merger review process and whether acquiring businesses can actually rely on the outcomes of the legal process. It would also punish companies for protecting their investment and technology from free-riding by those who did not pay for the innovation, making those companies less likely over the long term to make their platforms available to spur the growth of new products and services."
How will this lawsuit play out? What do think will happen to Facebook? Let us know in the comments below!