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Facebook under fire as states seek to rein in the social media giant

Facebook is one of the most valuable companies in the world, but its dominance is the subject of major new antitrust actions. A pair of lawsuits filed by the Federal Trade Commission, and by 46 states, allege that Facebook used its power illegally to drive out competition and buy out rivals. Phil Weiser, Colorado's Democratic attorney general, joins Judy Woodruff to discuss the suits.

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  • Judy Woodruff:

    Facebook is one of the most valuable companies in the world, but its dominance is the subject of major new antitrust actions. A pair of lawsuits filed by the Federal Trade Commission and by 46 states, along with the District of Columbia and the territory of Guam, allege that Facebook used its power illegally to drive out competition and buy out rivals, specifically Instagram and WhatsApp.

    Phil Weiser is the attorney general for the state of Colorado. He's a Democrat. He was part of this lawsuit. And he joins us now.

    Mr. Attorney General, thank you so much for being here.

    And I should say, before we begin, we want to note for the record that the Chan Zuckerberg Initiative founded by Facebook's Mark Zuckerberg and his wife, Priscilla Chan, they are a "NewsHour" funder, that organization.

    But, to you, Mr. Attorney General, tell us what it is that you and the others who are part of this lawsuit by these states allege that Facebook has done illegally.

  • Phil Weiser:

    Judy, it's a pleasure to be here.

    We're bringing this lawsuit because Facebook embarked on a campaign. They were either going to buy its most challenging rivals, or it was going to bury them. And that was a well-designed campaign. And what would happen is, if you were a threatening upstart, like Instagram, like WhatsApp, you could be purchased.

    Alternatively, if you refused to sell out, they would cut you off with access on a discriminatory basis and undermine your ability to compete in the marketplace. The result is, Facebook doesn't face competition. They don't have to provide as good a product, including as good privacy protections.

    And we don't have the innovation that is the American way that helps provide better products and services for customers.

  • Judy Woodruff:

    So, specifically, you're saying — this is something you're saying Facebook did systematically at one time? What are you — be a little bit more specific.

  • Phil Weiser:

    Sure thing.

    Starting a little less than a decade ago, Facebook was in a dominant position. In the social networking space, they had asserted their dominance. They had come to basically be the go-to place. Their plan is, we don't want to face competition, so we can either buy out the would-be rivals or we can undermine their ability to compete, choking off their air supply.

    And so that was the campaign they had. Two of the most notable threats they faced were Instagram and were WhatsApp. They purchased those companies. And they engaged in this effort to cut off others, so they couldn't be effective rivals.

  • Judy Woodruff:

    So, they — Facebook issued a statement today. And I know you're familiar with it.

    They say this is all about punishing a successful business. They say what they did with Instagram and WhatsApp, that they became popular products — the popular products they are because Facebook invested billions of dollars in them and years of innovation and expertise to develop them.

    That is at least the surface of their argument.

  • Phil Weiser:

    We have a different explanation for what's going on here, which is that both companies were on stellar trajectories, designed very effectively in a powerful niche where they could erode Facebook's dominance.

    And when Facebook purchased them, Facebook then managed the products to remain in a space that wouldn't undermine Facebook's dominant position. And so Facebook has squelched competition through these purchases, and that is, indeed, a core part of our case, as well as, of course, undermining other rivals who refused to sell out.

  • Judy Woodruff:

    So, the Instagram takeover happened in 2012, the WhatsApp in 2014.

    Why has it taken all these years to pull these — this lawsuit or these lawsuits together?

  • Phil Weiser:

    Under the antitrust laws, mergers can be conducted for purposes of maintaining a monopoly. And there have been past cases where's that's happened.

    What we have done here is, we have done a thorough look-back. We have sought to explain, why is Facebook this dominant firm that's not facing competitive threats? And part of the answer was this strategy of acquisitions, along with a commitment to bury those who refused to sell out.

    So, we're bringing what is an integrated case, putting together a chain of events, a campaign by Facebook, that we see as anti-competitive and violating antitrust laws.

  • Judy Woodruff:

    As we reported, Mr. Weiser, the Federal Trade Commission today announced a similar lawsuit against Facebook.

    Among other things, they are — they would require, if they're successful, that Facebook divest its assets, including Instagram and WhatsApp.

    Is that what your lawsuits is also asking them to do, essentially to break up Facebook?

  • Phil Weiser:

    Judy, we have two different categories of the remedies that we seek to restore competition and to give consumers the benefits of a competitive marketplace, first, as you note, divesting illegally acquired companies that were acquired for the purposes of squelching competition.

    Number two, provide reliable, nondiscriminatory access to Facebook's platform, so Facebook can't use this as a tool to undermine and threaten would-be rivals, as it has done so in the past.

  • Judy Woodruff:

    And are you saying they could do this without essentially breaking the company up?

  • Phil Weiser:

    Well, the divestiture is, if you will, a form of taking a piece of the company, Instagram, now a part of Facebook, WhatsApp, a part, and they would be sold off to rivals, so that they could be used as a basis for threatening Facebook's dominance.

    Facebook is allowed to compete on the merits. That's the American way. What they're not allowed to do is acquire other companies to prevent them from facing real threats or cut off access in a discriminatory way, so that companies are unable to compete against them.

  • Judy Woodruff:

    The attorney general for the state of Colorado, Phil Weiser, we thank you very much for joining us.

  • Phil Weiser:

    Thank you, Judy. Appreciate it.

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