[ad_1]
On a historic day for antitrust law, 46 states and the Federal Trade Commission Facebook sued for allegedly stifling competition. The lawsuits are a bomb for the tech industry, especially what the FTC seek: a break order Facebook in separate companies.
More specifically, the agency wants Facebook to sell its assets “including, but not
limited to, Instagram and / or WhatsApp. That would mean Facebook shareholders could own three companies, not one, while consumers could see two new companies take control of their data.
Such a move would mean a colossal upheaval in the social media landscape – if it ever happens in the first place. And it can be long.
While regulators frequently require companies to divest their business units, these orders typically come in the context of proposed mergers. An eminent recent example It was at this point that the Justice Department demanded the pharmaceutical giant Bayer to sell $ 9 billion in assets, including seed units, as a condition of Monsanto’s acquisition.
Facebook’s situation is different when it comes to the acquisitions the company made almost ten years ago (Instagram) and six years ago (WhatsApp) – a point Facebook was quick to point out.
“Now, many years later, with seemingly no regard for established law or the implications for innovation and investment, the agency says it was wrong and wants an overhaul.” , Facebook said in a declaration.
But while Facebook suggests it’s unfair for the FTC to try to reverse acquisitions it has tacitly approved in the past, there is no legal obstacle preventing the agency from doing so, according to Charlotte Slaiman. , a former FTC lawyer who now works in the public interest on a nonprofit basis. organization, Public Knowledge.
Slaiman says the problem is whether Facebook has behaved in an anti-competitive manner, and if so, the FTC can come up with whatever remedies it deems necessary to resolve the issue.
“They have presented a strong case and could win this victory,” Slaiman says of the government’s lawsuits, but adds that the issue of remedies is far from over.
Meanwhile, there are only a handful of precedents involving courts ordering business dissolution. The most famous recent example is where a federal judge ordered Microsoft in 2000, be split into two companies, one controlling Windows and the other which would own all other Microsoft companies. An appeals court, however, reversed this order and accepted a series of less drastic appeals.
The other major rupture case involved AT&T. In 1974, the Ministry of Justice requested an order forcing the telephone giant to sell its equipment subsidiary, Western Electric. Sensing it was going to lose, AT&T came up with its own disbandment arrangement which resulted in the company splitting into multiple units in 1982.
The AT&T deal was born out of numerous congressional inquiries – a process that Slaiman said should be followed in the case of Facebook. She praised recent congressional committee antitrust investigations, which she said helped lay the groundwork for this week’s lawsuits.
That still leaves the question of whether the FTC will actually succeed in forcing Facebook to cede WhatsApp and Instagram to a competitor, or to split them up as independent companies.
Slaiman was reluctant to make a prediction, but said it would probably be years before we knew the outcome. She noted that when it comes to companies seeking approval for mergers, companies are generally keen to provide documents to the government as quickly as possible – but in the case of Facebook, which hates the idea to part with its assets, the company is likely to find all means to slow down the process.
The bottom line is that it seems unlikely that Facebook will have to give up WhatsApp and Instagram anytime soon, if ever. But if Congress keeps the pressure on big tech companies, it’s possible Facebook will come up with a more modest solution to address the monopoly concerns raised in the lawsuits.
More to read absolutely technological coverage of Fortune:
- 2020 was a record year for European technological investments. Not even a pandemic could slow it down
- Shipping times for the holidays for FedEx, UPSand the postal service
- Quantum computing is enter a new dimension
- Battery boot backed by Bill Gates claims a major advance
- The founder of Indiegogo launches Vincent, a site to discover alternative investments
[ad_2]
