New York Attorney General Letitia James has announced multistate lawsuit against Facebook, charging the social media giant with predatorily acquiring its competition and reducing consumer privacy for profit.
The suit, backed by 48 attorneys general, alleges that for the last decade through today, the company has illegally stifled competition to protect its monopoly power and increase its advertising revenue.
James said Facebook had used its dominance and monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users.
“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,” she said Wednesday.
“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.”
She said almost every state in the country had joined the bipartisan lawsuit because Facebook’s efforts to dominate the market were as illegal as they were harmful.
In the suit, a person familiar with Facebook’s operations said if an 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.”
“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,” James said.
Facebook, launched in 2004, is a personal social networking service that rather than charging users, provides its services in exchange for a user’s time, attention and personal data. Facebook then monetizes its business by selling advertising to firms, using the vast trove of user data and high engagement as key selling points.
The lawsuit alleges Facebook uses a variety of methods to impede competing services – as CEO Mark Zuckerberg has stated to “build a competitive moat” around the company. The suit alleges the two most prominent strategies have been to acquire smaller rivals and potential rivals before they threaten Facebook’s dominance, and to suffocate and squash third-party developers that Facebook invited to use its platform — allowing Facebook to maintain its monopoly over the social networking market and make billions from advertising.
The coalition is asking the court to halt Facebook’s “illegal, anticompetitive conduct” and block the company from similar future behaviors. It is also asking the court to restrain Facebook from making acquisitions valued at or above $10 million without advance notice to the state of New York and other plaintiff states.
Lastly, the coalition is asking for Facebook to provide any additional relief the court determines is appropriate, including the divestiture or restructuring of illegally acquired companies, or current Facebook assets or business lines.
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