NY Attorney General joins 48 states in Facebook lawsuit
Social media giant accused of a decade of predatory acquisitions while reducing services and protections
New York Attorney General Letitia James on Wednesday filed a lawsuit against Facebook Inc., alleging that the company has and continues today to illegally stifle competition to protect its monopoly power.
The lawsuit alleges that, over the last decade, the social networking giant illegally acquired competitors in a predatory manner and cut services to smaller threats — depriving users from 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.
James led a bipartisan coalition of 48 attorneys general from around the nation in filing Wednesday’s lawsuit to stop Facebook’s alleged anticompetitive conduct.
“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. “Today, we are taking action to stand up for the millions of consumers and many small businesses that have been harmed by Facebook’s illegal behavior.
“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,” James continued. “Almost every state in this nation has joined this bipartisan lawsuit because Facebook’s efforts to dominate the market were as illegal as they were harmful. Today’s suit should send a clear message to Facebook and every other company that any efforts to stifle competition, reduce innovation, or cut privacy protections will be met with the full force of our offices.”
Since 2004, Facebook has operated as a personal social networking service that facilitates sharing content online without charging users a monetary fee, but, instead, provides these services in exchange for a user’s time, attention, and personal data. Facebook then monetizes its business by selling advertising to firms that attach immense value to the user engagement and highly targeted advertising that Facebook can deliver due to the vast trove of data it collects on users, their friends, and their interests.
In an effort to maintain its market dominance in social networking, Facebook employs a variety of methods to impede competing services and — as chair, CEO and controlling shareholder Mark Zuckerberg has stated — to “build a competitive moat” around the company.
The two most utilized strategies have been to acquire smaller rivals and potential rivals before they could threaten Facebook’s dominance and to suffocate and squash third-party developers that Facebook invited to utilize its platform — allowing Facebook to maintain its monopoly over the social networking market and make billions from advertising, the Attorney General’s Office said.
As one market participant noted, according to the Attorney General’s Office, if an application (app) encroached on Facebook’s turf or didn’t consider selling, Zuckerberg would go into “destroy mode,” subjecting small businesses to the “wrath of Mark.”
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