IN 2012, Instagram was growing rapidly and was seen as Facebook’s competitor, which bought it for $1 billion. Two years later, Facebook lapped up WhatsApp, another rising star. Both deals were approved by the US Federal Trade Commission. Now, the social networking giant is facing antitrust lawsuits by the Commission and nearly every American state on charges of using a ‘buy or bury’ strategy to snap up rivals and keep smaller competitors at bay. Facebook has hit back at the accusation of illegal acquisition to dominate the highly lucrative sector, terming it ‘revisionist history’. It argues that these companies were bought when they were much smaller and there was nothing pre-ordained about their success.
Unlike Europe, which has sought to penalise Big Tech for the growth-at-all-costs mentality, US regulators have maintained a hands-off approach to avoid any hindrance to the continued success. The lawsuits, thus, represent the most significant political and legal challenge to Facebook in its more than 16-year history. Governments across the world would be keenly watching the rare bipartisan efforts by American decision-makers on cutting digital empires down to size, and making them accountable for business practices. The legal filings cite internal messages from Facebook boss Zuckerberg, such as one 2008 email that said it was ‘better to buy than compete’. What is being sought is divestment of assets, effectively breaking up one of Silicon Valley’s most profitable firms, and restore competition ‘so that innovation and free competition can thrive’. Whether Instagram and WhatsApp will be cleaved off will be decided in courts, and it could take years to resolve.
Personal social networking is central to the lives of billions. The market dominance by a handful of powerful firms — with vast troves of data and money — is an uncomfortable fact. Their ever-expanding footprint and the consequences they pose, particularly during elections, are issues of serious concern. Ensuring that profits are not put ahead of consumers’ welfare and privacy has to be the primary objective, even if that requires slicing of the digital imperium or stricter scrutiny.