Did Crypto Plans Cause Massive Facebook Antitrust Lawsuit?

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A somewhat surprising news cycle hit Facebook this week when most US states teamed up and filed an antitrust lawsuit against the biggest social media platform. You may not have seen this on TV (or on your Facebook feed for that matter) as it is business news, but this is potentially huge. Mark Zuckerberg’s company could be forced to split up into smaller parts, just like the oil giant Standard Oil was forced to do at the beginning of the last century.

Although the European Union had since long filed antitrust suits against several Silicon Valley companies such as Apple, Google and Facebook, the US one is quite new and surprising. There may be agreement across the board that Facebook is too big, but the timing of the complaint is quite remarkable. The states could have at least waited until President-elect Joe Biden was sworn in.

Takeover history

The Federal Trade Commission (FTC) made sure that everyone in the US was on board with the complaint. Except for Alabama, Georgia, South Carolina and South Dakota all states complied and filed the charges. In addition to the original demand that the company be split up, state prosecutors want Facebook to stop imposing conditions on any software developers. The FTC claims that Facebook makes it hard for others to compete because of this obligation.

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Furthermore, the FTC wants Facebook should, as from next year, always request prior approval for any future acquisitions or mergers. Ever since Mr Zuckerberg launched Facebook back in 2004 (yes, that’s 16 years ago), the social media giant created an online user marketplace with many side business such as Instagram and WhatsApp. Facebook is now being accused of having bought (and in many instances overpaid) all these companies as it knew these business would otherwise grow into rivals.

Libra or Diem

Still, something seems to have set off the regulatory authorities in the US as both the Instagram and WhatsApp purchases were done a long time ago. Some analysts are seeing a strange coincidence in the blocking of Facebook’s Libra launch, it’s very own stablecoin that it wanted to roll out last year, and this antitrust suit.

Libra (now called Diem) was originally blocked by the global financial system who saw it as a threat to their existence. As Mr Zuckerberg and his board decided to revamp the project this year and launch Libra 2.0, in direct competition with the world’s central banks who are not too keen on letting a social media platform with 2 billion users launch it’s very own stablecoin, politicians might have come together in secret to decide to deal with Facebook for once and for all.

The plan is still for Facebook’s very own cryptocoin to be launched next year, but many wonder whether Zuckerberg will dare to go through with that given the massive antitrust case that is threatening his company.

Facebook Libra to launch in January 2021. Here’s my (antitrust) assessment of it: https://t.co/cVRNCQvsom (via @michlawreview).

News: https://t.co/HryZQ0fs1B.

— Thibault Schrepel (@LeConcurrential) December 2, 2020

By now, it is indeed possible that Facebook will have to give up at least some of it’s crown jewels in order to remain as big as it is. Will a promise not to enter the cryptoshere be enough?

Will regulators come for Bitcoin next?

vadim.zhakupov@gmail.com / Depositphotos.com