A leaked document acquired by the Wall Street Journal has revealed the defense Facebook has in case of a government-mandated breakup of its assets—including Whatsapp and Instagram.
The 14-page file reveals that the social media conglomerate would contest both acquisitions of Whatsapp and Instagram by the company passed FTC scrutiny and Facebook has since invested large sums of money into both platforms.
While reports have stated that the FTC is looking to launch an antitrust lawsuit against Facebook by the end of the year, nothing official has been announced as of yet. The House of Representatives Antitrust Subcommittees have been focused on the Menlo-Park based firm as well as Amazon, Apple, and Google, holding hearings in July with the CEOs of each company. The committees are expected to release their investigation findings into the businesses at the end of the month.
The document says that as Facebook poured money into boosting the growth of both Whatsapp and Instagram, they became integrated with Facebook’s core systems. If the government were to force divestiture of both platforms from Facebook, the company argues it would have to spend billions of dollars unwinding each system and in the process would weaken the security of each application. The file goes on to say that achieving true system independence at this point would be nearly impossible, with the paper concluding that “A ‘breakup’ of Facebook is thus a complete nonstarter.”
How well that argument would hold up is still in question. According to Tim Wu, a Columbia University law professor and tech policy expert, the idea that past government decisions regarding Facebook’s acquisitions should limit current action is “surprisingly weak.” As Wu points out, at the time the FTC wasn’t considering the purchases of Whatsapp and Instagram by Facebook to be based on limiting its competition, leaving the door open to examine those practices now. There is also no guarantee that the difficulty of breaking up the systems would factor into a court’s decision either.
Between the House investigations and the looming possibility of an FTC lawsuit, it’s unlikely that Facebook will come out of 2020 without some type of fight against the government. Although the company has declined to comment on the leaked document as of this writing, one can expect them to be preparing for the inevitable fight(s) ahead behind closed doors.
Patrick Auger is a management consultant and entrepreneur who resides in Austin, Texas. He has a Bachelor of Arts in Business Management from Western Illinois University, and is the Founder and Principal Consultant at Auger Consulting Group, LLC. When he's not writing for The American Genius, he's writing about the business of Mixed Martial Arts for The Body Lock or learning how to cook, one burnt recipe at a time.
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