The US Federal Trade Commission (FTC) and state attorneys general have attacked two acquisitions that Facebook made: Instagram in 2012 and WhatsApp in 2014….reports Asian lite News
As the US government went ahead with its plan to break up Facebook, the social network has hit back, saying that in addition to being “revisionist history, this is simply not how the antitrust laws are supposed to work”.
Jennifer Newstead, Vice President and General Counsel at Facebook, said late on Wednesday that the company looks forward to its day in court, “when we’re confident the evidence will show that Facebook, Instagram and WhatsApp belong together, competing on the merits with great products”.
The US Federal Trade Commission (FTC) and state attorneys general have attacked two acquisitions that Facebook made: Instagram in 2012 and WhatsApp in 2014.
According to Facebook, both of these acquisitions were reviewed by relevant antitrust regulators at the time.
The FTC conducted an in-depth “Second Request” of the Instagram transaction in 2012 before voting unanimously to clear it.
The European Commission reviewed the WhatsApp transaction in 2014 and found no risk of harm to competition in any potential market.
“Now, many years later, with seemingly no regard for settled law or the consequences to innovation and investment, the agency is saying it got it wrong and wants a do-over. In addition to being revisionist history, this is simply not how the antitrust laws are supposed to work,” Newstead stressed.
In a landmark antitrust action headlined by bipartisan support, the US government and 48 states have sued Facebook, accusing it of abusing its market power to kill off competition. The US is pushing for a spinoff of Facebook owned Instagram and WhatsApp.
According to Facebook, no American antitrust enforcer has ever brought a case like this before.
“When we acquired Instagram and WhatsApp, we believed these companies would be a great benefit to our Facebook users and that we could help transform them into something even better. And we did,” Facebook said.
“This lawsuit risks sowing doubt and uncertainty about the US government’s own merger review process and whether acquiring businesses can actually rely on the outcomes of the legal process,” it argued.
Facebook bought Instagram for $1 billion in 2012 and WhatsApp for $19 billion in 2014.
“The FTC was right to clear Facebook’s acquisition of Instagram eight years ago. The Instagram you see today is the Instagram that Facebook built, not the app it acquired,” Newstead said.
When Facebook bought Instagram, it had about 2 per cent of the users it has today, just 13 employees, no revenue and virtually no infrastructure of its own.
Today, Instagram has over one billion monthly active users.
WhatsApp has over two billion users all over the world, with more that 400 million users in India.
“Making Instagram part of Facebook has delivered tremendous benefits to consumers and businesses. Instagram became more reliable and avoided the growing pains that have derailed other fast-growing startups,” Facebook argued.
WhatsApp is no different.
“Making WhatsApp part of Facebook delivered benefits to consumers, just as we anticipated and hoped it would. We offered consumers around the globe a free messaging alternative to SMS and the fees mobile operators were charging for it,” said the company which is ready to fight the legal battle.