Regulators’ Probes, Looming Lawsuits Target Facebook Over Antitrust Issues

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U.S. regulators are eyeing complaints that Facebook is muscling out the competition in the virtual reality area, as more than 40 states gear up to file an antitrust lawsuit against the company next week. The latest point of contention over antitrust issues comes after comments from Joe Simons, chair of the U.S. Federal Trade Commission (FTC) last month. Simons said antitrust enforcers should be on guard against dominant companies buying emerging startups.

“A monopolist can squash a nascent competitor by buying it, not just by targeting it with anti-competitive actions,” Simons said. “It may be easier and more effective to buy the nascent threat, only if to keep it out of the hands of others.”

Bloomberg reported Thursday (Dec. 3) that virtual reality startups are accusing Facebook of muscling out the competition in that up-and-coming technology. Facebook is accused of using its market power to keep out companies that offer competing games and services.

The social media giant is also the world’s biggest virtual reality hardware maker, due to its 2014 acquisition of Oculus for $2 billion. Its practices are drawing the attention of the Justice Department’s antitrust division, Bloomberg said.

Earlier this week (Nov. 30), Facebook moved to acquire customer service chatbot startup Kustomer. Financial terms of the deal were not disclosed, but it could value the New York  startup at more than $1 billion, sources told The Wall Street Journal.

Reuters reported Wednesday (Dec. 2) that more than 40 states, led by New York, plan to sign on to an antitrust lawsuit against Facebook next week, according to sources.

Last monthLetitia James, New York’s state’s attorney general, said her office does not “comment on the details of an ongoing investigation, but as we have said before, we will continue to use every investigative tool at our disposal to determine whether Facebook’s actions stifled competition, reduced choices, or put user data at risk.”

It was in 2019 that the U.S. Justice Department and FTC began antitrust investigations into the four Big Tech companies, which also include Amazon, Apple Inc. and Google’s parent company, Alphabet.