On Wednesday afternoon, the Federal Trade Commission and a coalition of 48 state attorneys general filed broad antitrust charges against Facebook, seeking a reversal of its acquisitions of WhatsApp and Instagram. Now, Facebook has responded to those charges in an extensive post titled “Lawsuits Filed by the FTC and the State Attorneys General Are Revisionist History,” written by general counsel Jennifer Newstead.
Newstead’s primary defense is that both acquisitions resulted in better products for consumers — an implicit reference to the “consumer harm” standard that has also been central to the Department of Justice’s case against Google.
“These transactions were intended to provide better products for the people who use them, and they unquestionably did,” Facebook argues. “The FTC and states stood by for years while Facebook invested billions of dollars and millions of hours to make Instagram and WhatsApp into the apps that users enjoy today.”
Facebook also takes issue with the retroactive nature of the breakup. Both acquisitions are more than five years old, and were approved by regulatory agencies at the time.
“Regulators correctly allowed these deals to move forward because they did not threaten competition,” the post reads, detailing the FTC and European Commission reviews of the deals. “This lawsuit risks sowing doubt and uncertainty about the US government’s own merger review process and whether acquiring businesses can actually rely on the outcomes of the legal process.”
The question of retroactive review is an open topic in legal circles, but some scholars have argued it is beneficial for regulators to revisit previously cleared transactions.
The post also directly addresses one if the central allegations of both lawsuits — that Facebook locks out potentially competitive products from its platform, starving competitors of a much-needed user base. This behavior was particularly stark in the case of Vine, which was locked out of Facebook’s social API functions as soon as it was acquired by Twitter, reportedly at the direction of Mark Zuckerberg himself.
In the post, Newstead claims this kind of API restriction is standard practice for platforms. “Where platforms give access to other developers — and many do not provide access at all — they usually prohibit duplication of core functions,” the post reads. “LinkedIn, The New York Times, Pinterest and Uber, to name a few, all have similar policies.”
