FTC chief says breaking up Facebook would be hard to do

Joseph Simons, the chairman of the Federal Trade Commission, said on Monday that Facebook’s effort to integrate Instagram and WhatsApp more closely could stymie any attempt to break up the social media giant.

Mr Simons said all options were on the table as the agency investigates Facebook for potential antitrust violations, including major divestitures, but added that the plan by Mark Zuckerberg, chief executive, to knit together Facebook’s three major brands could complicate any case.

“If they’re maintaining separate business structures and infrastructure, it’s much easier to have a divestiture in that circumstance than in where they’re completely enmeshed and all the eggs are scrambled,” he told the Financial Times.

Facebook disclosed an antitrust investigation by the FTC last month, shortly after it agreed to pay $5bn and adopt new oversight practices as part of a privacy settlement with the agency.

Mr Simons signalled that he intended to complete the agency’s investigation into Facebook before the 2020 election. “Any significant case that I’m trying to emphasise, I would want to be out before the election,” he said.

The probe arose from the FTC’s technology task force, which was announced in February as part of an effort to review past transactions in the tech sector.

Mr Simons declined to discuss the specifics of what the FTC was investigating in Facebook’s case, but said the agency’s review of past mergers was focused on whether deals were designed to stamp out possible core-business competitors.

He pointed to the Instagram acquisition as an example, saying the FTC would not be looking at “whether they were going to succeed so much as a photo service, but whether they were going to develop into something that actually could challenge the Facebook platform”.

The FTC previously cleared both the WhatsApp and Instagram acquisitions by Facebook. Mr Simons acknowledged that it would be challenging for the agency to ask a court to reverse a merger it had approved.

“Yeah, it’s not easy,” he said. “On the other hand, you might have a situation where you have additional evidence that the company was engaged in a programme to basically snuff out its competitors through a process of acquisition.”

The FTC chairman, a veteran antitrust lawyer who once served as the director of the bureau of competition at the agency, said there were two potential theories about the success of a service like Instagram: either it succeeded because Facebook bought it, or that it would have succeeded anyway.

“Those are kind of the two competing scenarios and you have to see, do you have evidence that allows you to pick one over the other and prove it,” he said.

When asked what evidence he would be looking for to answer that question, Mr Simons said: “Maybe we missed something when we reviewed the transaction and there was evidence that was available that we just didn’t get or didn’t see or didn’t appreciate.”

He added: “And then the other thing is maybe historically you can show that it was, like I said before, part of a systematic effort to eliminate your competition.”

Source link