Facebook (NASDAQ: FB) stock price closed the week more than 2% lower after the company was hit by a groundbreaking lawsuit from antitrust agencies and a high number of states.
Fundamental analysis: Is Facebook in trouble?
A high number of states and the federal government filed antitrust lawsuits against the social media giant due to alleged monopolistic practices to obtain dominance.
The Federal Trade Commission (FTC) requested a permanent injunction in federal court, with a special focus placed on WhatsApp and Instagram, which were acquired for $19 billion and $1 billion, respectively.
“Personal social networking is central to the lives of millions of Americans,” said Ian Conner, Director of the Federal Trade Commission’s Bureau of Competition.
“Facebook’s actions to entrench and maintain its monopoly deny consumers the benefits of competition. Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive.”
The lawsuit shows that over 40 public prosecutors signed have backed it after a year-long investigation in Facebook’s practices.
“For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition,” Letitia James, New York Attorney General, said.
“By using its vast troves of data and money, Facebook has squashed or hindered what the company perceived to be potential threats.”
Earlier this year, Facebook agreed to pay a $5 billion civil penalty, the highest federal privacy fine in history, on similar allegations.
“People and small businesses don’t choose to use Facebook’s free services and advertising because they have to, they use them because our apps and services deliver the most value,” Jennifer Newstead, Vice President and General Counsel at Facebook, said
