Facebook Class Action Alleges ‘Brazen’ Monopoly Plot

Four companies have filed a class action lawsuit against Facebook claiming that the social network company set out to purposefully get rid of app developers that it saw as potential competitors.

Reveal Chat Holdco LLC and three other third-party app developers say that Facebook has engaged in “the most brazen, willful anti-competitive scheme in a generation” by trying to dismantle their companies because they were using Facebook data in better ways than Facebook itself.

“With its market dominance in imminent danger, Facebook moved to extinguish the mobile threat, to obtain a sustaining foothold in the Social Data and Social Advertising Markets, and to prevent any newcomers from building rival social networks,” the Facebook anti-competitive class action lawsuit claims.

The scheme, say the app developers, started when Facebook shut off their application program interfaces (APIs) from third party developers. This API contained the data that was needed to increase their growth, states the Facebook class action lawsuit.

Next, Facebook started collecting data from other online providers, such as Pinterest, Foursquare, and Tinder, basically forcing these companies to hand over their data, according to the plaintiffs. Facebook could now act as a “central hub” for data, the plaintiffs state.

The plaintiffs also allege that Facebook moved to stop direct competitors that did not rely on the social networks data. The company also shut out competitors that did use their data, such as WeChat and Line, by shutting them off from the Facebook platform.

Last, Facebook looked at other companies that they saw as threats and “extinguished” those applications by acquisition, such as What’s App and Instagram, according to the Facebook class action lawsuit.

“Facebook has maintained its dominance ever since 2010 when it emerged as the winner among social network websites such as MySpace and Friendster. It expanded its share further and maintained its dominance after its acquisitions of Instagram and WhatsApp” the class action complaint notes.

The class action lawsuit states that “today, Facebook is rapidly working to integrate the backends of its acquired WhatsApp and Instagram assets in the face of regulatory concern over Facebook’s unchecked market power and anticompetitive conduct.” 

The plaintiffs claim that this behavior by Facebook has created one of the most “unlawful” monopolies ever in the United States. They say that this class action lawsuit was filed to hold Facebook accountable for their anticompetitive conduct.

“Plaintiffs seek trebled damages and injunctive relief under the federal antitrust laws to remedy Facebook’s brazen play for dominance—and to stop the company from further solidifying its unlawful monopoly, barrier to entry, and market power,” state the class action plaintiffs.

An article from NBC News states that the lawsuit is based on 7,000 pages of secret documents that the news outlet obtained last year. The documents were reportedly leaked from a lawsuit which was brought by Six4Three, another app developer that is not in business anymore.

The plaintiffs contend that Facebook is now “scrambling” to integrate the backend of its products with those that they have acquired, mainly WhatsApp and Instagram. This integration is set to be completed in the first few months of 2020, according to the plaintiffs.

“Unless restrained, Facebook may impair the ability of Plaintiffs to obtain necessary relief in this action,” the Facebook class action lawsuit states.

What do you think of the claims brought against Facebook? Leave a message in the comment section below.

The plaintiffs are represented by Yavar Bathaee, Michael Pomerantz, David L. Hecht, Adam C. Ludeman and Brian J. Dunne of Pierce Bainbridge Beck Price & Hecht LLP.

The Facebook Anti-Competition Class Action Lawsuit is Reveal Chat HoldCo LLC, et al. v. Facebook Inc., Case No. 3:20-cv-00363, in the U.S. District Court for the Northern District of California.

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