Facebook Faces Antitrust Lawsuit From as Many as 40 U.S. States

A group of U.S. states led by New York is investigating Facebook for potential antitrust violations, with plans to file a lawsuit as soon as next week.
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A group of U.S. states led by New York is investigating Facebook  (FB) - Get Report for potential antitrust violations, with plans to file a lawsuit against the social media giant.

Citing four sources familiar with the situation, Reuters reported that more than 40 states are behind the lawsuit, which is expected to be filed as soon as next week.

Facebook and other tech giants including Amazon.com  (AMZN) - Get Report, Apple  (AAPL) - Get Report and Alphabet-owned Google  (GOOGL) - Get Report have been accused of using their size and reach to direct consumers to their own products and services, stifling competition in the process.

Specifically, federal and state antitrust authorities are probing whether Facebook is taking advantage of its size and platforms in search and advertising practices - in particular through third-party platforms it owns like Instagram and WhatsApp.

In Facebook’s case, antitrust officials have zeroed in on the social media giant's penchant to buy up smaller competitors and amalgamate them into its digital ecosystem to intentionally eliminate competition.

The Federal Trade Commission, whose commissioners met on Wednesday, could file a related complaint with an administrative law judge or in district court, Reuters reported. Facebook owns both Instagram and WhatsApp.

Facebook CEO Mark Zuckerberg has argued in congressional testimony that the company has a range of competitors, including the other tech giants. He has defended the company's acquisitions like Instagram and WhatsApp by saying the platform has helped them expand from small, insignificant companies into powerhouses.

The lawsuit marks another round of antitrust allegations that have been leveled against Facebook and big tech in the U.S. and in Europe over the past 24 months.

In October, the Department of Justice sued Alphabet’s Google, arguing the need to "restrain Google from unlawfully maintaining monopolies in the markets for general search services, search advertising, and general search text advertising in the United States through anticompetitive and exclusionary practices, and to remedy the effects of this conduct."

Last year, EU antitrust regulators fined Alphabet $1.7 billion for unfairly restricting rivals from displaying ads on its platform via third parties using its AdSense tool.

Shares of Facebook were down 1.25% at $283.94 in trading on Thursday.

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