Explainer: What to expect as Facebook battles U.S. lawsuits over its market power

FILE PHOTO: Facebook logos
FILE PHOTO: The Facebook logo is displayed on a mobile phone in this picture illustration taken December 2, 2019. REUTERS/Johanna Geron/Illustration

December 9, 2020

WASHINGTON (Reuters) – The U.S. Federal Trade Commission’s and states’ twin complaints against Facebook Inc come on the heels of a major lawsuit filed by the government against Alphabet’s Google in October and kicks off what is likely to be a long legal battle.

Here are some answers to key questions about the case:

WHAT ARE THE ALLEGATIONS AGAINST FACEBOOK?

One of the allegations against Facebook is that it strategically seeks to buy potential rivals, often at a big premium, before they have a chance to grow. For example, Facebook bought Instagram in 2012, which at the time had no revenue and a handful of employees but an impressive number of users. It then purchased Onavo in 2013, which protected its users from third-party tracking. It has used Onavo to identify other takeover targets. It bought WhatsApp in 2014.

The FTC also alleged in its complaint that Facebook enticed small, new companies onto the platform in order to make Facebook more attractive to users, but only if they refrained from competing with Facebook itself or with Facebook Messenger.

WHAT REMEDIES DID THE FTC REQUEST THE JUDGE IMPOSE?

The Federal Trade Commission has broad leeway in requesting a remedy, and asked the judge to force Facebook to divest assets, potentially including Instagram and WhatsApp.

It also asked the judge to order Facebook to stop requiring small companies on its platform to not compete with it.

WHAT DOES FACEBOOK SAY ABOUT THESE ALLEGATIONS?

Facebook said it is reviewing the FTC and state antitrust complaints.

The company said 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.”

HOW LONG WOULD A TRIAL AND APPEALS TAKE?

While court hearings to determine if a merger should be stopped can be relatively quick, in this case, the run-up to a trial or trials and the proceedings themselves could last a year or more. A decision could come months after that, antitrust experts said.

ARE THE ALLEGATIONS AGAINST FACEBOOK POLITICALLY MOTIVATED?

President Donald Trump’s administration has been angry with several Silicon Valley companies for allegedly silencing conservatives, and many Republican lawmakers have brought up the issue of bias during recent antitrust congressional hearings.

Facebook notably clashed with the administration when it added disclaimers to Trump’s posts, including those that cast doubt on the fairness of the 2020 presidential election.

(Reporting by Diane Bartz, Nandita Bose, David Shepardson in Washington and Katie Paul in Palo Alto; Editing by Lisa Shumaker)