by Tyler Durden
Tue, 09/15/2020 - 20:05
It's been a rough day for
Facebook: first the world's biggest social network was dumped by Kim Kardashian
who called on her tens of millions of global followers to boycott Mark
Zuckerberg's cash cow, and now the WSJ reports that the FTX is preparing to
file a possible antitrust suit against the company, sending its stock plunging
after hours, and dragging the Nasdaq lower.
The report reveals that the FTC has spent more than a year
investigating concerns that Facebook "has been using its powerful market
position to stifle competition" and may file a suit before the end of the
year to challenge the company's monopoly in social media. The inquiry is part
of a broader antitrust effort by authorities examining the conduct of a handful
of dominant tech companies.
The WSJ reports that the probe, which is in its late stages and
which was previously disclosed by the company last year, included taking
testimony from Mark Zuckerberg, something the commission didn’t do during a
prior probe of the company’s privacy practices, and which resulted in a
record-breaking $5 billion settlement. In other words, this time around either
the monetary penalty will be materially higher, or the FTC may in fact pull a
Standard Oil on Facebook, and split up the company.
The key FTC concerns and questions revolves around Facebook's
prior acquisitions, "as well as about issues related to how Facebook
manages its platform with regard to app developers." For its part,
Facebook has countered that its acquisitions aren’t anticompetitive and have
improved products and experiences for its users, although in light of today's
market moving snub by none other than Kim Kardashian that approach may be in
jeopardy. One almost wonders if Kim's tweet and the WSJ report weren't
coordinated.
Facebook has not yet held discussions with the FTC’s commissioners,
which would likely happen at the very final stage of the process. At that
point, the decision whether to sue Facebook will be in the hands of
republicans, as a majority on the five-member FTC would need to vote in favor
of any lawsuit. Currently that commission consists of three Republicans,
including Chairman Joseph Simons, and two Democrats.
So far, no final decision has been made on whether to sue
Facebook, and the WSJ notes that the commission doesn’t always bring cases even
when it is making preparations to do so, such as when it decided against filing
an antitrust complaint against Google Inc. in 2013 after a lengthy
investigation.
Should the FTC sue Facebook and win, it could seek a range of
remedies designed to promote competition against the company, from restrictions
on how Facebook operates to breaking off pieces of its business. "The
commission can’t unilaterally dictate such changes; it would first have to
prove in legal proceedings that the company violated federal antitrust law, and
that such changes were necessary."
The FTC has a pair of options if it sues Facebook: It could bring a case in federal court or it
could file a complaint in its in-house legal system, where the case would first
go before an administrative law judge. The commission itself
would then review that judge’s work and issue a decision, which Facebook then
could challenge in a federal appeals court. If the commission wants to seek an
interim injunction blocking certain Facebook practices before the end of
litigation, it would have to go to federal court.
As part of its antitrust pursuit, the Trump administration will
hardly stop with Facebook. The DOJ which shares antitrust authority with the
FTC, is also planning to file an antitrust lawsuit soon against Google, the WSJ
previously reported.
In any event, since a legal case against either company could
likely take years to resolve, the officials who bring a lawsuit will likely not
be around to see its conclusion. Furthermore, the Nov. 3 election could impact
the future of any case, though both Republicans and Democrats have been
critical of tech-company practices even if Facebook has been focusing its
recent crackdown exclusively on posts emerging from the Trump campaign.
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