Government

Iowa among states filing sweeping lawsuit against Facebook

Iowa Attorney General Tom Miller stands Dec. 30, 2019, next to a painting outside his Des Moines office depicting when h
Iowa Attorney General Tom Miller stands Dec. 30, 2019, next to a painting outside his Des Moines office depicting when he argued a case before the U.S. Supreme Court in 2003. (Jim Slosiarek/The Gazette)

WASHINGTON — The U.S. government and 48 attorneys general including Iowa’s filed landmark antitrust lawsuits Wednesday against Facebook, seeking to break up the social-networking giant over charges it engaged in illegal, anti-competitive tactics to buy, bully or kill rivals.

The twin lawsuits filed in federal district court allege Facebook and its chief executive, Mark Zuckerberg, behaved as an unlawful monopoly for years — one that repeatedly weaponized its vast stores of user data, wealth and corporate muscle to ascend to one of the most widely used services in the world.

The state and federal complaints chiefly challenge Facebook’s past acquisition of two companies: Instagram, a photo-sharing tool, and WhatsApp, a messaging service. Investigators said the purchases ultimately helped Facebook remove potential potent rivals from the digital marketplace, allowing the tech giant to enrich itself on advertising dollars at the cost of users.

“We argue in this case that while being on Facebook is free in terms of paying a charge, it’s not totally free,” Iowa Attorney General Tom Miller told reporters Wednesday. “They get this enormous amount of data from us as we participate, and that’s incredibly valuable to Facebook” in targeting advertising.

Miller, a Democrat who serves on a bipartisan executive committee leading the states’ investigation, said that “Facebook has gained tremendous power over Americans’ lives through its monopolistic behavior. Without meaningful competition, consumers and small businesses have fewer choices in social networking, resulting in diminished privacy, reduced quality and less transparency.”

The lawsuits together represent the most significant political and legal threats to Facebook in its 17-year history, setting up a clash between regulators and one of Silicon Valley’s most profitable firms that could take years to resolve.

Antitrust regulators asked a court to consider forcing Facebook to sell off Instagram and WhatsApp to remedy their competition concerns, also seeking a wide array of relief that threatens to constrain Facebook’s future ambitions.

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The Federal Trade Commission, led by Republican Chairman Joe Simons, brought its lawsuit in a Washington. D.C., district court. Letitia James, the Democratic attorney general of New York, led her Democratic and Republican counterparts in filing theirs in the same venue.

Facebook did not immediately respond to a request for comment, though the company is sure to defend its business fiercely. CEO Zuckerberg has argued that the internet remains sufficiently competitive, bolstered by new companies including TikTok. Privately, he told employees he would “go to the mat” to defend against a suit he saw as an “existential” threat to the company, according to audio revealed last year.

For years, state and federal regulators had maintained a hands-off approach to the tech industry, even as watchdogs around the world began to probe and penalize Facebook and its digital peers. But a series of high-profile scandals and missteps have brought Democrats and Republicans into rare accord as they seek anew to challenge Silicon Valley over its ever-expanding footprint — and the consequences they say it poses to corporate rivals and consumers alike.

U.S. investigators last year initiated antitrust probes targeting Facebook. Dozens of state attorneys general promised a broad review of Facebook’s business, aiming to explore the nexus between its digital dominance and efforts to glean users’ data. The FTC, meanwhile, took aim at Facebook almost immediately after concluding an investigation into the company over its entanglement with Cambridge Analytica, a political consultancy, that forced the tech giant to pay a $5 billion penalty.

But the FTC wanted more. Immediately, regulators turned their attention to Facebook’s purchase of Instagram for $1 billion in 2012 and WhatsApp for $19 billion in 2014, two deals that the government could have blocked at the time but did not. Facebook initially pledged to operate these companies independently but later sought to integrate them — and the user data derived from the apps — more fully into its social-networking service.

Facebook previously asserted WhatsApp and Instagram became successful precisely because of the tech giant’s massive investments in them. The argument, however, has hardly dissuaded the company’s critics, including those in Congress, who found reason for suspicion after concluding their own antitrust investigation this year. The review unearthed a trove of emails from Zuckerberg and his lieutenants apparently plotting against competitors in a series of discussions in which they referenced making a “land grab” for rival apps.

Investigators Wednesday also faulted Facebook for the way it manages its vast trove of user data and the policies that govern when and how third-party app developers and others can access it. Such tactics allowed Facebook to stamp out potential rivals before they became too popular, investigators found.

In 2013, for example, Facebook sought to neuter the rise of Vine, a short-video service launched by Twitter, the FTC complaint says.

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Facebook cut Vine off from accessing Facebook’s features, such as friend lists, in effect halting its growth, according to the federal agency.

The Facebook case marks the latest in a series of antitrust lawsuits targeting tech giants. Last month, the Justice Department filed an antitrust lawsuit against Google, arguing the company engaged in wrongful tactics to expand the reach of its search and advertising empires. State attorneys general are expected to file their own cases against Google in the near future.

Iowa’s Miller said Republican Gov. Kim Reynolds signed off on Iowa’s participation in the national antitrust case against Facebook and a similar legal challenge involving Google that still is being worked on.

Government watchdogs similarly have set their eyes on Apple and Amazon, raising the potential for additional antitrust action to come.

Amazon CEO Jeff Bezos owns the Washington Post.

Rod Boshart of The Gazette Des Moines Bureau contributed.

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