Facebook & Google Unbundling?

In the last month of last year, lawsuits were filed by the US Justice Department against Facebook, and Google’s parent company Alphabet Inc.

Accused of using their market power to suppress, or acquire, rival companies, a judgement against them could see Facebook forced to sell off WhatsApp and Instagram, the platforms they acquired in order to help stave off their waning relevance.

Seemingly rising from a growing movement to hold tech companies responsible for their business practices, and in a massive report, US Federal investigators recommended that the companies be unbundled.

Illegal Acquisition

In its complaint, a group comprising of 46 of the 50 US States asked that Facebooks purchase of Instagram be declared illegal.

New York Attorney General Letitia James said in a statement, “for nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals, snuff out competition, all at the expense of everyday users,” accusing them of buying up rivals before the company dominance could be threatened.

Facebook has not officially responded, besides saying that they are reviewing the anti-trust complaints, but in a leaked audio recording of internal company meetings, CEO ark Zuckerberg apparently told employees that Facebook would “go to the mat” to fight any legal injunction to break up the company, calling it an “existential” threat.

Anti-Trust Legislation

These are the biggest anti-trust lawsuits levelled by the US Government since the Microsoft anti-trust case in 1998. The Microsoft case was eventually settled by the federal government, but the years-long court battle led to the extension of anti-trust scrutiny, and is credited by some with paving the way for the growth of the internet.

The announcement came in the wake of Facebook’s announced the upcoming acquisition of “Kustomer” which was valued at US$1 billion, and a few months after they bought GIPHY, a popular animated image creation and sharing site.

Shares of Facebook fell 3% on the announcement, which adjusted to approximately a 1.7% loss after correction.