US watchdog turns spotlight on Facebook’s deals
The Federal Trade Commission is investigating social media company’s acquisition practices
Bengaluru — The US Federal Trade Commission (FTC) is investigating whether Facebook acquisitions were aimed at buying up potential rivals before they could become a threat to the social media company, the Wall Street Journal reported on Thursday, citing people familiar with the matter.
The company’s acquisition practices are the main focus of the probe, as the FTC looks into Facebook buying technology-based startups to keep them from challenging it, the report said. Facebook has purchased dozens of companies over the years, including messaging company WhatsApp and image sharing platform Instagram.
Facebook last week said the FTC had opened an antitrust investigation in June looking into the areas of “social networking or social media services, digital advertising, and/or mobile or online applications”.
Facebook shares were down 0.7%.
Both FTC and Facebook declined to comment on the report.
The US justice department said on July 23 it was opening a broad investigation of major digital technology firms, looking into whether they engage in anticompetitive practices, a clear signal that President Donald Trump’s administration is stepping up its scrutiny of the industry.
In June, Reuters reported that the FTC and the justice department, which enforce US antitrust laws, have divided oversight over the big four tech companies, with Amazon.com and Facebook under the watch of the FTC, and Apple and Alphabet’s Google under the justice department.
In July, Facebook settled an FTC probe into allegations of inappropriately sharing data of 87-million users with the now-defunct British political consulting firm Cambridge Analytica. Facebook will pay a record-breaking $5bn fine.
In Washington, Democrats and Republicans alike have expressed growing concern about the size of the largest tech firms and their market power. Democratic presidential candidate Elizabeth Warren has called for breaking up companies like Amazon, Apple, Google and Facebook and unwinding prior acquisitions.
In July, the House of Representatives judiciary committee’s antitrust panel pressed executives from the four firms about their competitive practices and noted that Google, Facebook, Amazon had a rising share of key markets.
It is rare for the US government to seek to undo a consummated deal. The most famous case in recent memory is the government’s effort to break up Microsoft. The justice department won a preliminary victory in 2000 but was reversed on appeal. The case settled with Microsoft intact.