Facebook has Maintained its Monopoly Over Social Networking Market With its Anti-Competitive Conduct, Says United States FTC
The United States Federal Trade Commission (FTC) has registered a complaint on Wednesday against Social Media giant Facebook. The complaint was registered before the District Court at Columbia on the ground that Facebook has maintained its monopoly over the social networking market with its anti-competitive conduct.
Facebook deprives the competition in the market
The complaint alleged that Facebook uses the tactic of buying companies that possess competitive threats to it and imposes restrictive policies that hinder potential rivals that it cannot acquire. FTC submits that Facebook has protected its monopoly in three different ways.
Facebook has not only acquired Instagram and WhatsApp but also made key application programming interfaces (APIs) available to third-party apps only when they refrain from giving the very core functions that Facebook provides, and connecting with or promoting other social networks which according to the complaint filed, deprive the competition in the market and assist Facebook in order to maintain its monopoly in the personal social networking market.
Further FTC claims that this attitude of Facebook, subdues healthy competition for the sale of advertising and it deprives users of personal social networking in the USA of the benefits of competition, including increased quality, option, innovation and choice. Facebook has a recognisable dominance over the market (over 60%). This dominant position is continued because of its significant entry barriers, including direct network effects and high switching costs.
"By monopolizing personal social networking, Facebook thereby also deprives advertisers of the benefits of competition, such as lower advertising prices and increased choice, quality, and innovation related to advertising."
Conduct of Facebook violates the provisions of the Sherman Act and FTC Act
Moving ahead FTC claims that Facebook has tried a lot to spot and monitor competitive threat early so that it can be neutralized before they have a chance to emerge fully. This can be verified by the fact that it has acquired Onavo, a user surveillance company in the year 2013. Even though the operation of Onavo has been closed in 2019, it still continues to do the same by using other data.
In view of such observations, FTC has claimed that this form of anti-competitive conduct by Facebook is totally in violation of Section 2 of the Sherman Act constituting unfair methods of competition in violation of Section 5(a) of the FTC Act and thus it prayed for the divestiture or reconstruction of businesses, the divestiture of assets and such other relief sufficient to restore the competition that would exist absent the conduct alleged.
