FTC Accuses Facebook of Using 'Buy-or-Bury' Techniques to Stifle Competition and 'Hone a Surveillance-Based Advertising Model'

Today, the United States Federal Trade Commission strengthened its antitrust case against Facebook. It provided more details about how Facebook bought out or crushed its competitors in an effort to eliminate competition.

The amended complaint is longer than the original and contains additional evidence to support the FTC's argument Facebook is a monopolist. It also asks the judge to order Facebook to sell Instagram (and WhatsApp), two social networking apps that Facebook also owns.

The FTC alleges that Facebook used a "buy-or-bury” scheme to keep its market dominance. This was after it failed "to develop innovative mobile features" during the transition to mobile devices from desktops. Facebook is also accused in luring developers onto its platform and monitoring them for signs that they are successful, before burying them when it became a threat.

The FTC claims that Facebook is able to create a surveillance-based advertising system that causes consumers increasing harm, even though there has been no serious competition.

"Facebook did not have the technical and business skills to survive the mobile transition," said Holly Vedova, FTC Bureau Acting Director. Holly Vedova is the FTC Bureau of Competition Acting director. "Facebook illegally bought or buried new innovators after failing to compete with them," she said. This conduct is just as anticompetitive as if Facebook had bribed app competitors to not compete. Antitrust laws were created to stop this kind of illegal activity by monopolists. Facebook's actions have hampered innovation and improved product quality. They have also degraded the user experience on social networks, exposing them to less privacy and data protections as well as intrusive advertisements. Today's FTC action aims to end this illegal activity and restore competition to the benefit of Americans as well as honest businesses.

FTC claims that Facebook could not integrate its desktop-based technology with mobile devices. When it became impossible to compete fairly, Facebook executives bought up new innovators like WhatsApp and Instagram to address the threat.

Facebook's policy of preventing third-party developers from its Facebook Platform had a negative impact on companies like Circle and Path. It also "deprived consumers" of the opportunity to be disruptive mavericks that could have been able force Facebook to improve its social network.

FTC claims that the amended complaint by the FTC provides direct evidence of Facebook's power to control prices, drive out competitors, and lower the quality of products delivered to consumers, without losing a substantial number of users.

In December 2020, the FTC filed an antitrust suit against Facebook. It teamed up with 46 states and the District of Columbia to file the lawsuit.