FTC accusing Facebook of 'buy-or-bury' tactics in antitrust complaint

The Federal Trade Commission claims Facebook bought or buried competing services to build and maintain market dominance.

What you need to know

• The Federal Trade Commission filed an amended antitrust complaint against Facebook on Thursday, August 19, 2021.
• The complaint claims that Facebook used "an illegal buy-or-bury scheme to maintain its dominance" in the social media space.
• The amended filing centers around Facebook purchasing WhatsApp and Instagram and accusations of stifling competition.

The Federal Trade Commission filed an amended antitrust complaint against Facebook to the U.S District Court for the District of Columbia on August 19, 2021. The complaint alleges that Facebook used buy-or-bury tactics to build and maintain a monopoly in the social media space.

The FTC filed a complaint against Facebook on June 28, 2021, but a Judge dismissed it. At the time, the judge gave the FTC a chance to amend its filing. The new complaint is 80 pages, which is 27 pages longer than the initial filing. Facebook has until October 4, 2021 to respond to the amended filing. While the new filing is more defined, its central argument remains the same.

The core of the filing is that Facebook allegedly purchased or limited competing social media services, including WhatsApp and Facebook. In essence, it claims that Facebook failed to transition to the mobile space and bought up other companies rather than innovating.

Holly Vedova, FTC Bureau of Competition acting director, said, "Facebook lacked the business acumen and technical talent to survive the transition to mobile. After failing to compete with new innovators, Facebook illegally bought or buried them when their popularity became an existential threat."

Vedova continued to relate Facebook's strategy to antitrust legislation, "This conduct is no less anticompetitive than if Facebook had bribed emerging app competitors not to compete. The antitrust laws were enacted to prevent precisely this type of illegal activity by monopolists."

Facebook purchased Instagram in 2012 and WhatsApp in 2014. A press release on the filing states:

[Facebook] supplemented its anticompetitive shopping spree with an open-first-close-later scheme that helped cement its monopoly by severely hampering the ability of rivals and would-be rivals to compete on the merits. By anticompetitively cementing its personal social networking monopoly, Facebook has harmed the competitive process and limited consumer choice.

The filing also accuses Facebook of "bait and switch" tactics. It claims that the Facebook Platform started as an open space for third-party developers but that the company quickly made developers agree to conditions that prevented threats against Facebook from being created.

Facebook responded to the new complaint, stating, "The FTC's claims are an effort to rewrite antitrust laws and upend settled expectations of merger review, declaring to the business community that no sale is ever final" (via CNBC).

Parts of the new filing are currently redacted, so more information is expected in the future.