• Mon. Sep 19th, 2022

“While there is certainly merit to the allegations, we are skeptical the FTC will prevail.”

Dec 10, 2020

Analysts on Wall Street have branded two major antitrust lawsuits launched against Facebook “absurd”, suggesting the Federal Trade Commission is unlikely to succeed in breaking the tech giant up. 
On Wednesday, Facebook was hit with two big antitrust suits, one from the FTC and the other from 48 state attorneys general across the US. 
Both lawsuits revolve around the company’s acquisitions of Instagram and WhatsApp in 2012 in 2014, respectively.
Critics have hit out at Facebook’s decisions to buy rather than compete with Instagram and WhatsApp, alleging it imposed “anticompetitive conditions” on software developers.
Both suits want to force Facebook into a “divestiture of assets”, meaning the firm would have to sell off Instagram and WhatsApp. Facebook could also be required to get approval from the government before any mergers or acquisitions in the future.
But analysts at Wall Street investment bank Baird reacted with skepticism, rubbishing suggestions that Instagram presented an “existential threat” to Facebook’s alleged monopoly. 
In an advisory note to investors issued on Wednesday, analysts picked apart the FTC’s logic: “In 2012, Facebook a monopoly? Does the government not remember MySpace, Google+, Pinterest, Orkut, Bebo, Tumblr, Twitter, LinkedIn, Vine…”
Referring to calls for Facebook to sell Instagram and WhatsApp, they added: “Courts won’t buy this. Facebook has built up these services using its own technology and innovation, they are largely integrated on the back end, plus there is obviously intense competition from TikTok, Snap, Twitter, Pinterest, Discord, Parler, among others.”
In a separate note, issued by financial services firm Wedbush, analysts were likewise “skeptical” the FTC would succeed in breaking up the tech giant. 
“While there is certainly merit to the FTC’s allegations that Facebook has strengthened its competitive position through these acquisitions, we are skeptical that the FTC will prevail.”
The note continues: “It is difficult to see how Facebook’s competitive position was strengthened to the point that it precluded competition. Twitter (founded in 2006), Snap (founded in 2011) and TikTok (founded in 2016) have all thrived in spite of Facebook’s alleged anti-competitive behavior.
“We are skeptical that a federal court will compel a divestiture, and equally skeptical that a divided Congress will pass a law that forces such a result.”
Facebook issued a bad-tempered response to the two lawsuits on Wednesday evening, arguing that an enforced breakup would set a poor precedent for other businesses.
A statement published via its Twitter account said: “We’re reviewing the complaints & will have more to say soon. Years after the FTC cleared our acquisitions, the government now wants a do-over with no regard for the impact that precedent would have on the broader business community or the people who choose our products every day.”