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FTC: Facebook’s “Buy or Bury” Scheme

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On Thursday, as part of its ongoing federal antitrust lawsuit against Facebook, the Federal Trade Commission (FTC) filed an amended complaint against the company. The 80-page document argues the social media giant has become a monopoly that has “resorted to an illegal buy-or-bury scheme to maintain its dominance.” The lawsuit points out that Facebook’s business plan has remained true to a deeply rooted view within the company expressed by Mark Zuckerberg in 2008 of “it is better to buy than compete.”

The FTC’s complaint, filed in the U.S. District Court for the District of Columbia, asserts that after repeatedly failing to develop innovative mobile features for its network, Facebook instead unlawfully acquired its innovative competitors with popular mobile features that succeeded where Facebook’s attempts fell apart. The complaint accuses the tech oligarchy of attracting developers to its platform with the intent of surveying them for signs of success and then burying them when they became competitive threats. This tactic has left Facebook with little serious competition and allowed the company to “hone a surveillance-based advertising model and impose ever-increasing burdens on its users.” Holly Vedova, FTC Bureau of Competition Acting Director, explained:

“Facebook lacked the business acumen and technical talent to survive the transition to mobile. After failing to compete with new innovators, Facebook illegally bought or buried them when their popularity became an existential threat. This conduct is no less anti-competitive than if Facebook had bribed emerging app competitors not to compete. The antitrust laws were enacted to prevent precisely this type of illegal activity by monopolists. Facebook’s actions have suppressed innovation and product quality improvements. And they have degraded the social network experience, subjecting users to lower levels of privacy and data protections and more intrusive ads.

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