The U.S. Federal Trade Commission is considering asking the courts to put a halt to Facebook CEO Mark Zuckerberg’s plan to merge the technical backends of Facebook, WhatsApp, and Instagram on antitrust grounds, the Wall Street Journal reports.
The plan in question was touted by Zuckerberg and crew as a way to increase the ease of interactions across services and increase security by implementing end-to-end encryption, but it also conveniently comes at a time when pressure is growing on U.S. federal antitrust authorities to do something about the social media giant’s dominance of multiple tech markets.
Merging the three services could give Facebook an opening to argue that they are now so interdependent it would be impossible, or at least unduly difficult, to break them up into separate companies.
The FTC and the U.S. Department of Justice are already investigating Facebook as part of a broader federal review of whether huge firms like it, Google, Amazon, and Apple act in an anticompetitive manner.
Earlier this year it slapped the company with a five billion fine for prior violations of user privacy, a move opposed by the two Democratic commissioners on the FTC board as grossly inadequate. The newer investigation could hurt Facebook much harder, with talk of examining acquisitions like Instagram and WhatsApp—but only if the FTC is willing to take a harder swing at the company this time around.
According to the Journal, sources said that concerns that merging the three services could hurt online competition, as well as wariness that Facebook could be shooting for an end-run around antitrust law, have spurred internal debate at the FTC about whether to ask for a court-ordered injunction blocking it from moving forward. The move would require that a majority of FTC commissioners agree, as well as require the agency to file a federal lawsuit. It would also signal that the FTC is leaning towards more robust action this time around, though only time will tell.
“The advantages are that it gets things moving, and sort of forces things to a judicial decision very quickly,” Columbia University law professor Tim Wu told the Journal. “As opposed to having an antitrust investigation going for five years… The burdens of proof can be higher for the government, but if they’ve got a good case it can be advantageous.”
Shortly after that, the FTC was considering filing a lawsuit to block the merger broke, Facebook stock took a roughly three per cent hit, dropping from just shy of $US201 ($292) per share to $US196 ($284). Short-term stock fluctuations are far from a reliable indicator of the long-term fortunes of any given company, however.
One year ago, its stock stood at $US144.50 ($210) and has trended upwards despite the company’s unending series of crises.