Cecilia Kang and Mike Isaac, reporting for The New York Times:
Federal and state regulators of both parties, who have
investigated the company for over 18 months, said in separate
lawsuits that Facebook’s purchases, especially Instagram for $1
billion in 2012 and WhatsApp for $19 billion two years later,
eliminated competition that could have one day challenged the
company’s dominance. […]
Facebook, the prosecutors said Wednesday, should break off
Instagram and WhatsApp, and they said new restrictions should
apply to the company on future deals. Those are some of the most
severe penalties regulators can demand. Facebook said it planned
to vigorously defend itself against the accusations. […]
“The most important fact in this case, which the commission does
not mention in its 53-page complaint, is that it cleared these
acquisitions years ago,” Jennifer Newstead, Facebook’s general
counsel, said in a statement. “The government now wants a do-over,
sending a chilling warning to American business that no sale is
Facebook has a point here, but I think they need a much better defense than “Once a merger is approved, anything goes.”
The company’s stock fell 2 percent, to $277.70 a share, after the
lawsuits were announced.
Investors clearly don’t think they’re actually going to bust up Facebook, but investors are often totally wrong. The thing I’d be really worried about, if I were Zuckerberg, is the broad bipartisan nature of the regulators behind this. It’s hard to believe you could get 48 attorneys general behind any major initiative today.
With 46 states (along with Guam and the District of Columbia) joining the complaint, you have to wonder what the deal is with the states who didn’t (Alabama, Georgia, South Carolina, and South Dakota).
See also: Techmeme’s roundup of coverage and commentary.
★ Wednesday, 9 December 2020