Nebraska Attorney General Joins Facebook Lawsuit
by JEFF TURNER
Nebraska Attorney General Doug Peterson joined a coalition of Attorneys General across the country in suing the social media titan Facebook. A press release put out from the Attorney General’s office says over the last decade, the social networking giant illegally acquired competitors in a predatory manner and cut services to smaller threats, depriving users of the benefits of competition and reducing privacy protections and services along the way — all in an effort to boost its bottom line through increased advertising revenue. Facebook is specifically charged with violating Section 2 of the Sherman Act, in addition to multiple violations of Section 7 of the Clayton Act.
The Sherman Act is legislation prohibiting anti-competitive agreements and conduct attempting to monopolize a market. Violation of this entails a company gaining monopoly power in their market, or acquiring power in a way other than by offering a superior product. Section 7 of the Clayton Act, is also designed to prevent monopolies by restricting the number of entities one can have ownership of as deemed appropriate by the government.
Notable Attorneys General participating in this lawsuit include New York Attorney General Letitia James, California Attorney General and incoming Health and Human Services Secretary Xavier Becarra, Iowa Attorney General Tom Miller, District of Columbia Attorney General Karl Racine, and Leevin Taitano Camacho, Attorney General of the Territory of Guam.
General Letitia James’ office said, “instead of competing on the merits, Facebook used its power to suppress competition so it could take advantage of users and make billions by converting personal data into a cash cow.” The office of General Miller of Iowa added in an interview with KCRG, “Without meaningful competition, consumers and small businesses have fewer choices in social networking, resulting in diminished privacy, reduced quality, and less transparency.” Becarra’s office said “Rather than outcompete or outperform, Facebook simply bought the competition. Innovation in Silicon Valley and elsewhere depends on a fair and competitive marketplace.” Guam and DC’s AG’s echoed these sentiments.
According to the Attorney General’s press release, an effort to maintain its market dominance in social networking, Facebook employs a variety of methods to impede competition. The coalition of AGs argues that Facebook primarily targets competitors with a ‘buy or bury’ approach: acquiring smaller rivals and potential rivals before they could threaten Facebook’s dominance. Moreover, Facebook’s monopoly gives it broad discretion to set the terms for how its users’ private information is collected and used, even if those terms conflict with the interests and preferences of Facebook users.
Facebook employs unique data-gathering tools to monitor new apps, all in an effort to see what is gaining traction with users. According to the AG’s complaint, that data helps Facebook select acquisition targets that pose the greatest threats to Facebook’s dominance.
CEOs of Amazon, Apple, Facebook, and Google testified before Congress in the tech antitrust hearing.
For years now Facebook has owned apps like Instagram and WhatsApp (they bought Instagram in 2012 and WhatsApp in 2014, spending billions on both) – if they lose this lawsuit, the company may be forced to sell these assets and/or others.
This coalition of AG’s asks the court to restrain Facebook from making further acquisitions valued at or in excess of $10 million without advance notice to the plaintiff states. Finally, the court is asked to provide any additional relief it determines is appropriate, including the divestiture or restructuring of illegally acquired companies, or current Facebook assets or business lines.
Separately, but in coordination with the Attorneys General, the Federal Trade Commission (FTC) also filed a complaint against Facebook.
According to Attorney General Peterson’s press release, the only states that have not joined the lawsuit are Alabama, Georgia, South Dakota and South Carolina.