There is some bad news in store for one of the biggest social media players – Facebook Inc – who could be forced to sell their prized assets WhatsApp and Instagram after the US Federal Trade Commission and nearly every US state filed lawsuits against the social media company, saying it used a ‘buy or bury’ strategy to snap up rivals and keep smaller competitors at bay.
With the filing of the twin lawsuits on Wednesday (December 9), Facebook becomes the second big tech company to face a major legal challenge this year after the US Justice Department sued Alphabet Inc`s Google in October, accusing the $1 trillion company of using its market power to fend off rivals.
How will this case impact you?
There might not be any immediate impact to users of WhatsApp and Instagram as such kind of lawsuits take years to resolve. However, if Facebook are indeed forced to relinquish its prized acquisitions there repercussions.
Minor changes could mean no more ‘From Facebook’ branding message but major ones could be complete overhauling of security and information systems at both WhatsApp and Instagram. It is unclear at this moment how Facebook shares user data between Instagram and WhatsApp.
Why is Facebook facing these lawsuits?
The complaints accuse Facebook of buying up rivals, focusing specifically on its previous acquisitions of photo-sharing app Instagram for $1 billion in 2012 and messaging app WhatsApp for $19 billion in 2014.
Federal and state regulators said the acquisitions should be unwound – a move that is likely to set off a long legal challenge as the deals were cleared years earlier by the FTC.
In simple terms it is claimed that Facebook harms competition, leaving consumers with few choices for personal social networking and deprives advertisers of the benefits of competition.
Google is facing its own antitrust lawsuit filed by the Department of Justice and 11 states. Apple is paying $113 million to settle a suit over its ‘Batterygate’ controversy, and the European Union is investigating the company's App Store as well Apple Pay mobile payments.
The case is likely to hinge not only on Facebook’s share of social media users but the vast troves of data it collects from some three billion users worldwide including two billion on WhatsApp and a billion on Instagram.
What will happen to Instagram and WhatsApp if Facebook is forced to sell?
Both Instagram and WhatsApp would return to being independent entities if the lawsuit is successful. The creators of both apps have already left Facebook, opposed to the direction their apps had taken under Mark Zuckerberg’s Facebook, especially over privacy and data-sharing.
Both companies will go up for sale, and Twitter will surely re-bid for Instagram after their failed attempt in 2012.
