App developers sue Facebook over ‘anti-competitive conduct’

Lawsuit is based on leaked internal Facebook documents obtained and published by Computer Weekly and NBC last year

App developers have filed a lawsuit against Facebook accusing the social media company of “overtly anticompetitive conduct”.

The proposed federal class action, filed on 16 January 2020, follows the publication of thousands of confidential internal Facebook documents obtained and published by Computer Weekly and NBC.

About 7,000 pages of leaked internal documents, including emails from Facebook CEO Mark Zuckerberg and COO Sheryl Sandberg, were first disclosed by Facebook and placed under seal during court proceedings brought by now-defunct app developer Six4Three, which is not involved in the current lawsuit.

Five developers are now using the documents as the basis for a lawsuit against Facebook. They claim the social media company is responsible for “the most brazen, wilful, anticompetitive scheme in a generation”.

The complaint alleges that Facebook “moved to crush or co-opt competition” from app developers that built apps on its own platform, and that it “collected valuable user data from competing platforms, growing its own mobile footprint and constraining the growth of rivals”.

Facebook “moved aggressively to shut out entirely direct competitors that had built independent social networks of their own… and monitored the market for nascent threats to its business, and then extinguished these threats through anticompetitive conduct or by targeted acquisition”, the suit claims.

According to the complaint, Facebook began the process of weaponising its platform to eliminate new competition emerging from the rise of smartphones and mobile apps around 2011, which it did through a mixture of whitelist and data-sharing agreements, as well as the surveillance and acquisition of any competitive threats.

This includes the acquisition, and subsequent integrations, of both Instagram and WhatsApp, which the complaint claims were put to “new and anticompetitive purposes” after the departure of their respective founders in 2018.

“Facebook faced an existential threat from mobile apps, and while it could have responded by competing on the merits, it instead chose to use its might to intentionally eliminate its competition,” said Yavar Bathaee, a partner at law firm Pierce Bainbridge and co-lead counsel in the case.

“Facebook deliberately leveraged its developer platform, an infrastructure of spyware and surveillance, and its economic power to crush or acquire anyone that competed with them.”

Facebook, however, has dismissed the claims as having no legal basis.

“We operate in a competitive environment where people and advertisers have many choices,” a Facebook spokesperson said in a statement. “In the current environment, where plaintiffs’ attorneys see financial opportunities, claims like this aren’t unexpected, but they are without merit.”

In response to previous press inquiries from Computer Weekly and others since February, Facebook has maintained that leaked documents were “cherry-picked” by Six4Three to support its lawsuit.

The app developers claim that Facebook “has a dominant share in both the social data and social advertising markets, as well as the power to raise and/or control the price of advertising or the cost of user data acquisition”.

The US Federal Trade Commission is seeking an injunction to bar Facebook from further integrating its apps, including WhatsApp and Instagram, which federal regulators might want to unwind as part of a future breakup.

In October 2019, New York Attorney General Letitia James announced that 47 attorneys general from states and US territories planned to take part in a New York-led antitrust inquiry into Facebook.

At the time, James said that “Facebook may have put consumer data at risk, reduced the quality of consumers’ choices and increased the price of advertising”, and promised to leave no stone unturned.

In the UK, the Competition and Markets Authority is considering a range of possible interventions against Google and Facebook following concerns that the duo’s dominance in digital advertising is negatively affecting consumers and businesses.

The five developers suing Facebook are: Reveal Chat, LikeBright, Lenddo, Cir.cl and Beehive Biometrics.

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