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Facebook sued by 48 states, Federal Trade Commission over allegations of monopolistic practices

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Dave Fidlin | The Center Square

(The Center Square) – New York Attorney General Letitia James on Wednesday announced the state was joining dozens of other agencies across the U.S. in a lawsuit that takes aim at social media giant Facebook for its size and dominance in the marketplace.

James said there have been a number of concerns with the company, founded more than a decade-and-a-half-ago. Among them: anti-competitive allegations, monetizing consumer data, stifling innovation and privacy breaches.

“For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users,” James said in a Wednesday afternoon news conference.

There are a number of reasons New York is joining 47 other states and the Federal Trade Commission in filing a lawsuit, James said.

But one recurrent theme James shared throughout the more than 15-minute news conference was Facebook’s acquisition of Instagram and WhatsApp in 2012 and 2014, respectively.

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“They’ve reduced choices for consumers, they’ve stifled innovation and they’ve degraded privacy protections for millions of Americans,” James said. “Facebook would try to squeeze every bit of oxygen out of the room for smaller companies that refused to be bought. They sent a clear message to the industry: Don’t step on Facebook’s turf.”

James declined to comment on whether she or other state attorneys general within the country have actively engaged with Facebook officials about divestitures.

“I’m not going to negotiate in the public and will not divulge the conversations that we’ve had with Facebook,” she said. “But we are not going to allow any company to think that they are too big to fail.”

Facebook in recent years has faced criticism for its handling of user information. The Cambridge Analytica scandal in early 2018 placed the company under a microscope after it became known millions of users’ personal data was acquired without their consent and, in turn, became a tool for targeted political advertising.

“No company should have this amount of unchecked power over our personal information and our social interactions,” James said. “We cannot let large corporations gain more and more power over our lives through anti-competitive processes that only serve their interests.”

As technology has gained growing prominence in a year marked with shutdowns and social distancing, James said it is more important than ever to tackle the issues within the lawsuit.

“New Yorkers throughout our state, and consumers across this nation use Facebook to stay in touch with friends and family, they share content, they have conversations, they post pictures and videos,” she said. “With the ongoing pandemic, many use Facebook as a critical place for social engagement.”

While the acquisitions of Instagram and WhatsApp each occurred more than half a decade ago, James said she was confident the collection of suits would bring relief to consumers and businesses.

“We are pretty confident that we will succeed,” she said. “Just look at previous actions that have been taken by DOJ and our office as well, with respect to Microsoft, with respect to AT&T. It’s critically important that we have the power and the jurisdiction to seek remedies, including, but not limited to, divestiture.”

James also touched on why she and other attorneys general across the country filed individual suits alongside the FTC, rather than one collective complaint.

“We work collaboratively with the FTC, but it’s also important to understand that we are independent government enforcers of the law,” she said. "We are aligned substantively with FTC, but if you look at, and review, our complaint, stylistically, there might be differences.”

Facebook, in a statement posted to Twitter, argued that all of its acquisitions had already been subject to government review.

“Years after the FTC cleared our acquisitions, the government now wants a do-over with no regard to the impact that precedent would have on the broader business community or the people who choose our products every day,” the company wrote.