Why is Facebook being sued? Tech company faces legal fight to keep Instagram and WhatsApp after ‘buy or bury’ accusations

Facebook CEO Mark Zuckerberg. (Pic: Getty Images)

Facebook has a fight on its hands to keep prized assets Instagram and WhatsApp after US federal regulators and 46 state prosecutors launched legal cases against the tech giant.

The lawsuits accuse the social media company of taking illegal actions to acquire rivals, stifle competition and adopting a "buy or bury" approach to maintain its market dominance.

In its defence, Facebook said it had invested heavily in both Instagram and WhatsApp and the acquisitions of both companies had been approved by regulators years ago.

Why is Facebook being sued?

The lawsuits have been filed by the states and US regulators Federal Trade Commission (FTC), accusing Facebook of adopting a "buy or bury" mentality to potential rivals.

This, officials say, hurts competitors and users, whose data supports the company's advertising revenue.

New York attorney general Letitia James is leading the legal fight by the 45 states.

"For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users," she said.

"No company should have this much unchecked power over our personal interaction and social interactions. That's why we are taking action today."

Washington, D.C. and Guam. Alabama, Georgia, South Carolina and South Dakota did not participate in the lawsuit.

What has Facebook said in response?

Facebook's general counsel Jennifer Newstead called the lawsuits “revisionist history” and said antitrust laws don't exist to “punish successful businesses”.

"The government now wants a do-over, sending a chilling warning to American business that no sale is ever final," said Newstead, defending Facebook's investments in Instagram and WhatsApp.

What happens now?

A long legal battle is expected to take place between the participating states, FTC and Facebook.

Facebook chief executive Mark Zuckerberg said in a post on the firm’s internal discussion platform the lawsuits were “one step in a process which could take years to play out in its entirety” and that he did not anticipate any impact on jobs, according to Reuters.

How much did Facebook pay for Instagram?

Instagram, launched in 2010, had become increasingly popular by the time Facebook made a move to purchase the fellow social media site in 2012.

Facebook paid $1 billion (£750bn).

How much did Facebook pay for WhatsApp?

In 2014, Facebook bought WhatsApp, a similar service to Facebook's own messenger app, for $20bn (£15.1bn).

Both of Facebook's purchases were given the green light by the FTC at the time.

How much is Facebook worth?

Facebook, founded in 2004 by Zuckerberg in his Harvard dorm room, made an $18bn (£13.6bn) profit in 2019. Facebook's apps are used by more than 2.5 billion people each day and the company is valued at nearly $800bn (£603bn).

What's Facebook's share price?

Facebook's share price is currently 277.92 US dollars, as of 07.42am on Thursday 10 December.

It suffered a 3% dip earlier in 2020 after news broke of Facebook's interest in Giphy.

Giphy, a website for making and sharing animated images, or GIFs, was bought in May 2020.