Facebook chased by US Trade Commission for ‘burying successful competitors’

The U.S. Federal Trade Commission (FTC) filed an amended complaint against Facebook in the agency’s ongoing federal antitrust case, following the court’s June 28 ruling on the FTC’s initial complaint. The complaint alleges that after repeated failed attempts to develop innovative mobile features for its network, Facebook instead resorted to an illegal buy-or-bury scheme to maintain its dominance.

The U.S. Trade Commission accuses Facebook of unlawfully acquiring innovative competitors with popular mobile features that succeeded where Facebook’s own offerings fell flat or fell apart. And to further moat its monopoly, Facebook lured app developers to the platform, surveilled them for signs of success, and then buried them when they became competitive threats. Lacking serious competition, Facebook has been able to hone a surveillance-based advertising model and impose ever-increasing burdens on its users.

FTC also repeats its request that a court order Facebook to sell Instagram, which it bought in 2012 for $1 billion, and WhatsApp, which it bought in 2014 for $19 billion.

“Facebook lacked the business acumen and technical talent to survive the transition to mobile. After failing to compete with new innovators, Facebook illegally bought or buried them when their popularity became an existential threat,” said Holly Vedova, FTC Bureau of Competition Acting Director.

“This conduct is no less anticompetitive than if Facebook had bribed emerging app competitors not to compete. The FTC’s action today seeks to put an end to this illegal activity and restore competition for the benefit of Americans and honest businesses alike.”

As described in the amended complaint, after starting Facebook Platform as an open space for third party software developers, Facebook abruptly reversed course and required developers to agree to conditions that prevented successful apps from emerging as competitive threats to Facebook.

The amended complaint bolsters the FTC’s monopoly power allegations by providing detailed statistics showing that Facebook had dominant market shares in the U.S. personal social networking market.

The suit also provides new direct evidence that Facebook has the power to control prices or exclude competition; significantly reduce the quality of its offering to users without losing a significant number of users or a meaningful amount of user engagement; and exclude competition by driving actual or potential competitors out of business.

According to the amended complaint, Facebook continues to monitor the industry for competitive threats to its personal social networking monopoly.