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The FTC Wonders If Facebook Crushed Potential Competitors

The agency appears clueless about Facebook’s unfair business practices and how they harmed consumers

Did Facebook quash potential competitors?

That is the question on the FTC’s mind, according to a story in today’sWall Street Journal, as they begin their preliminary investigation into whether the company’s many acquaints during the period 2008 to present stifle competition and as a result injured consumers.

The answer to the question the FTC poses is, of course Facebook either bought or crushed and made potential competitors , making them stillborn in their start up incubators. Why this is a question that is perplexing to the FTC is mystifying. The fact that they need to deliberate at length over this issue, demonstrates they clearly don’t understand Facebook’s business model or business practices.

The Journal notes,

“The tech giant has acquired about 90 companies over roughly the last 15 years, according to data compiled by S&P Global. Among those companies are the photo-sharing app Instagram and the messaging service WhatsApp, which bolstered Facebook as a dominant force in social media and messaging.”

Curiously, Facebook declined to comment concerning the investigation.

The ignorance of regulators could be forgiven if they exhibited a willingness to do penance for their decade-long somnolence and gross negligence in giving Facebook a laissez-faire, carte blanche to conduct their operations in a manner that they saw fit.

The FTC, as well as other regulatory agencies were asleep at the helm, while the company eliminated start up enterprises that it viewed as a threat to its social media market dominance. In short, regulators gave Facebook a get out of jail free card, while legislators marveled and paid extraordinary deference to the wised of the world’s largest advertising platform masquerading as a tech company.

The FTC has a chance to redeem itself for its inexcusable dereliction of duty, and stop equivocating over whether Facebook used anticompetitive practices.

Memo to FTC: yes Facebook did.

The other aspect of the investigation that is going to be a waste of time is resolving the question of whether Facebook’s unfair business practices “harmed” consumers. The Journal reports the prevailing view of lawyers at the FTC in connection with the necessary burden

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of proof for an anti-trust finding,

“If the FTC were to identify antitrust issues with any of Facebook’s past acquisitions, the commission could pursue a range of remedies, from seeking a spinoff of certain acquisitions to restricting Facebook’s conduct with some of the assets it has acquired. Any such effort could lead to litigation.”

Two ancillary issues are raised by the Journal’s article. First, of course there is going to be litigation. Facebook will immediately challenge any finding of the FTC that threatens its targeted advertising empire. The other issue that will need to be addressed, is the undue focus on the “consumer harm” standard that pervades current anti-trust law. It is abundantly clear that anti-trust law has failed to keep up with the 21st corporate business practices of “surveillance capitalism,” that is endemic in the tech industry. The argument is that since Facebook is free, consumers can never sustain any harm.

As I have argued before, the analysis should dismiss this legal proposition because it makes it difficult to pursue anti-trust actions. As I have argued before, the focus of any investigation should be the data harvesting and deceptive business piracies of Facebook that form the core of the company’s operations. It’t time the 20th century legal Rip Van Winkles in the FTC and the Justice Department to pierce the PR veil Facebook constantly raises to argue there is no consumer harm.

Facebook isn’t “free”. The company sells its users private data for enormous profit. It doesn’t disclose to whom the data is transferred or the monetization process. Additionally, Facebook users are “harmed”, by the company’s multiple data breaches that puts its users in jeopardy.

Despite their pious statements that each new data breach was a fluke and they will cure these defects in the future, Facebook understands there is no way to ensure customers data integrity; it accepts this as a cost of doing business.

Additionally, the DOJ and FTC could argue that those who didn’t use the Facebook platform were wrongly tracked and their private data sold to third parties, without their knowledge or consent. Facebook misappropriated these individuals private personal data for profit. Why shouldn’t these individuals be entitled to compensation?

Facebook used these deceptive practices to become a $454 billion company. The anti-trust argument would be that it was the company’s deceptive and surreptitious practices that gave it an unfair advantage in the market place and remedies need to be effected, including the equitable remedy of disgorgement of profits for its ill-gotten gains.

If the DOJ and FTC can get out of each others way and end their silly bureaucratic turf wars, perhaps they could prepare an action against Facebook, that would be not only legally viable , but also , that would have a high likelihood of success on the merits.

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