Adding another chapter to the U.S. government’s clamp down on “big tech”, the Federal Trade Commission sued Facebook on Wednesday, alleging the company is “illegally maintaining its personal social networking monopoly through a years-long course of anticompetitive conduct.” Following a broad investigation in cooperation with 46 states, the District of Columbia and Guam, the FTC came to the conclusion that Facebook is systematically suppressing competition, taking particular offense in the company’s acquisitions of Instagram and WhatsApp dating back to 2012 and 2014, respectively.
According to a statement of FTC Bureau of Competition Director Ian Conner, the Commission is seeking to “unwind Facebook’s prior acquisitions of Instagram and WhatsApp”, a bold target considering that the FTC greenlit the Instagram deal in 2012 after an in-depth review and the European Commission found no threat to competition stemming from the WhatsApp in a similar investigation in 2014.
In a statement published by Facebook, the company’s Vice President and General Counsel Jennifer Newstead calls the lawsuit “revisionist history”, pointing out that Facebook invested billions of dollars to make Instagram and WhatsApp what they are today and warning that “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.”
As the following chart shows, Facebook does have a point when saying that the companies it acquired in 2012 and 2014 were nowhere near where they are today. Instagram had around 30 million users at the time of its acquisition, while WhatsApp was considerably larger at 450 million users when Facebook came knocking.