New Jersey has joined with 47 other states in suing social media giant Facebook for allegedly violating federal antitrust laws by monopolizing the market for personal social networking services, and by using illegal mergers and other anti-competitive tactics to maintain its monopoly power.
Filed in federal court, the multi-state complaint alleges that Facebook has aggressively maintained monopoly power in the market for personal social networking services for a decade. According to the filing, the popular web platform has undermined competition and dominated the market by deploying a “buy or bury” strategy to eliminate competition from emerging rivals. The lawsuit argues that this, in turn, has harmed Facebook’s consumers, advertisers, competitors, and the economies of the states.
The complaint alleges that Facebook’s illegal conduct resulted in heftier profits for the company and a diminished experience, including fewer privacy options, for users of Facebook’s platform, as well as for users of the once-rival platforms that Facebook acquired, like Instagram and WhatsApp.
“Social networking companies like Facebook exert incredible influence and power over how we experience the world today,” said New Jersey Attorney General Gurbir Grewal. “Meanwhile, they monetize our data and sell targeted ads based on our personal information and usage patterns. But big tech companies that acquire and exert their power and influence over our behavior through unlawful means and in illegal ways must be held to account. And that is precisely what we are doing with today’s lawsuit against Facebook: we are showing that no company is too big or too powerful to avoid scrutiny.”
The lawsuit alleges that Facebook profited by significantly increasing the ad load on its social media pages, including on Instagram, which saw a 50 percent ad load increase in 2018 following its acquisition by Facebook. In addition to Facebook users seeing more ads and less of the content from family and friends that they sign on to enjoy, the complaint alleges users have suffered as Facebook has increased the amount of personal information it extracts from them and because it has failed to remove fake accounts, hate speech, misinformation, and other content that harms their experience and public welfare.
According to the lawsuit, businesses advertising with Facebook are often charged “quality-adjusted” prices to promote their products or services, but cannot gain a reliable sense of how the ads are performing because Facebook does not permit full, independent verification of its advertising performance metrics.
One count of the three-count lawsuit alleges that Facebook violated the Sherman Act by unlawfully maintaining a monopoly in the market for personal social networking services. Two other counts allege that the company enhanced its monopoly power and violated the Clayton Act through its unlawful acquisitions of once-rival social media platforms Instagram and WhatsApp. The complaint alleges that Facebook has stifled the type of competition that would otherwise lead to enhanced user experiences, including greater variety and quality of user options, as well as more features and a broader array of privacy protection options. The lawsuit does not address the impact Facebook has had on steep revenue declines for news outlets.
The complaint seeks a variety of relief, including asking the court to find the Instagram and WhatsApp acquisitions illegal enjoining Facebook from making certain future acquisitions without advance notification to the participating states.
To read the full lawsuit filing, visit https://www.nj.gov/oag/newsreleases20/Facebook-Complaint.pdf.