Facebook facing antitrust investigation from 47 state attorneys general

Facebook PR dept leaves en masse

On Tuesday, CNN reported that 47 state attorneys general are now investigating Facebook for potential antitrust violations. In September, eight state officials initiated a probe into the social network’s business practices. However, as the investigation has gone on, most of America’s state attorneys general have joined the anticompetitive inquiry.

Reasons for the Facebook Investigation

Two months ago, New York State Attorney General Letitia James explained that her office launched the probe to make three determinations. The agency wants to know if Facebook has improperly handled user data, misled advertisers, and/or used its market dominance to unfairly harm competitors.

In July, the Federal Trade Commission (FTC) levied Facebook with a $5 billion fine for its mishandling of subscriber information. The FTC took the social network to court for its role in the Cambridge Analytica scandal. Accordingly, the outcome of that case will likely play a significant role in the current investigation.

Facebook also recently settled a significant lawsuit regarding its relationship with advertisers.

On October 7, the Big Tech giant agreed to pay $40 million to settle class-action claims by 1.35 million marketers. The plaintiffs sued because the corporation admitted in 2016 that it incorrectly tabulated how much time users spent watching video advertisements. As a result, the advertisers mistakenly believed that Facebook’s videos had a greater impact on consumers than they did.

Though the firm agreed to the eight-figure payout, it maintains that it never intentionally misled its corporate partners. In Q2 2019, the company generated $16.6 billion in advertising revenue.

Recently, several state and federal officials, as well as market experts, met in New York to discuss the ongoing investigation. As part of the six-hour conference, the group discussed Facebook’s now-controversial acquisition of WhatsApp and Instagram. Though unremarkable at the time, the corporation’s purchase of two of its competitors is now regularly cited as an example of its anticompetitive behavior.

Indeed, Senator Elizabeth Warren (D-MA) and Facebook co-founder Chris Hughes said that the social network should be broken up because it has become a monopoly.

Federal-State Team Up

Another idea discussed in the New York meeting was the possibility of a collaboration between state and federal authorities. Currently, the U.S. Department of Justice (DOJ) is also probing the firm for possible antitrust violations. U.S. Attorney General William Barr called for an investigation following “complaints by consumers, businesses and entrepreneurs” about Facebook’s practices.

In the late 90s, the DOJ and 20 state attorneys general sued Microsoft for engaging in anticompetitive behavior. By pooling resources, state and federal authorities could potentially present a stronger case against the social networking service.

Furthermore, the officials’ meeting also hosted economists Fiona Scott Morton and Hal Singer. In recent years, the pair has garnered media attention for their criticism of Facebook and other alleged tech sector monopolies.

Despite facing mounting pressure from state and federal regulators, the social network seemingly isn’t very concerned about being prosecuted. Will Castleberry, Facebook’s Vice President of state and local policy, said that his firm will “work constructively with state attorneys general.” The executive also said that Facebook welcomes a “conversation” with policymakers regarding its business practices.

Notably, the European Union’s regulatory body announced plans to have a “conversation” with Facebook regarding its overseas sales and data-sharing operations.