BOSTON — On Wednesday, Massachusetts Attorney General Maura Healey joined a coalition of 47 other attorneys general in suing Facebook, claiming the social media giant “has spent the last decade illegally stifling competition in an effort to maintain its monopoly in the market and boost its profits, resulting in reduced privacy protections and services for consumers.”
“For nearly a decade, Facebook and Mark Zuckerberg ran an illegal monopoly in the social media sphere by buying out companies that showed promise as potential competitors and blocking others – and they did this at the expense of their users’ time and privacy,” AG Healey said. “We are suing to stand up for the millions of consumers and small businesses that have been harmed by Facebook’s illegal business practices.”
The lawsuit alleges that, since 2004, Facebook has allowed customers to share their content online for no cost, but instead “provided these services in exchange for the user’s personal data.” According to the attorneys general, Facebook acquires user’s data and personal information which allows the social networking site to sell targeted advertising that firms highly value.
Facebook is being accused of also dominating the marketplace by “employing a variety of methods to deny users other choices for social networking, including by acquiring smaller rivals – such as Instagram and WhatsApp – before they become a threat.” The lawsuit also alleges the company maintains its monopoly over other social media sites by cutting “off the access that third party app developers have to its site after Facebook uses those companies to expand Facebook’s user base and functionality.”
In addition to Massachusetts, and led by New York, today’s lawsuit was also joined by the attorneys general of Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Hawaii, Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming, and the territory of Guam.
According to the lawsuit, Facebook uses its illegal monopoly to set the terms for how its users’ private information is collected and used. By cutting off third-party developers’ access to its platform, Facebook deprives users of the choice of social networking sites to use and the company is able to make decisions about how to curate content on its website and use the data it collects to further its profits.
The lawsuit also points out Facebook uses data gathering tools to single out new apps on the market that could pose a threat and facilitates their strategy of buying out the competition - like the company did when they purcheased Instagram for $1 billion, despite not having any revenue and valueing itself at $500 million. Similarly, Facebook bought popular messaging app Whatsapp for nearly $19 billion, far more than the $100 million another competitor had offered.
According to the lawsuit, “Facebook is specifically alleged to be in violation of the federal Sherman Act, which prohibits any monopolization of the marketplace, and the federal Clayton Act, which prohibits mergers and acquisitions which may lessen competition.”
The goal of the lawsuit is to permanently stop Facebook’s illegal anticompetitive conduct and increase privacy protections for its users. The coalition is specifically asking the court to prevent Facebook from making further acquisitions valued at or in excess of $10 million without advance notice to the plaintiff states.
Today’s complaint was filed in the U.S. District Court for the District of Columbia. The Federal Trade Commission (FTC) also filed a separate complaint today against Facebook in the same court. The FTC coordinated with the multistate coalition in its investigation.
This is a developing story. Check back for updates as more information becomes available.
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