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Illustration: Sarah Grillo/Axios

Facebook has been under federal scrutiny for more than a year, and Wednesday's new lawsuits brought by the Federal Trade Commission and a coalition of state attorneys general showed enforcers want to go a lot further than many observers thought.

Here's what we know now that the suits have landed.

The Federal Trade Commission wants to break up Facebook, not just reform its practices.

  • The commission's lawsuit calls for unwinding the previously cleared Instagram and WhatsApp mergers, which it claims allowed Facebook to eliminate competitive threats and shore up its monopoly power.
  • The FTC also wants the court to require Facebook to provide prior notice and seek approval for future acquisitions, going beyond what's already required under law under federal merger rules.

The FTC says Facebook's "monopoly" means consumers are missing out on innovation, product quality and choice.

  • The complaint notes that an independent Instagram would have provided a check on Facebook's "treatment of and level of service offered to users" as well served as an alternative personal social network for consumers.
  • The agency also argues advertising might be cheaper absent the Facebook monopoly.

Facebook's moves to freeze out competitors raised antitrust alarm bells.

  • The FTC argues that Facebook imposed anticompetitive conditions on third-party software developers' access to interconnections to its platform, and cut off API access to firms it perceived as competitive threats.
  • The conditions both deterred developers from including features that may compete with Facebook and, by terminating access, helped prevent promising apps from growing into threats, says the FTC.
  • Facebook argues that some apps that had access tried to replicate Facebook unfairly, prompting the policies.

States were united in their effort.

  • Ultimately, 48 attorneys general participated in the state suit, including California, which had been cagey about its involvement. By contrast, the recent Department of Justice antitrust case against Google won support from only 11 states, all with Republican leadership.

Privacy, regulators now say, is a competition concern.

  • The state lawsuit mentions privacy dozens of times, arguing that Facebook users have a closely surveilled experience on the platform due to Facebook's size and scope.
  • The lawsuit reads: "Facebook’s conduct deprives users of product improvements and, as a result, users have suffered, and continue to suffer, reductions in the quality and variety of privacy options and content available to them."
  • State AGs also argue that WhatsApp was a privacy-focused app before its acquisition and Facebook slowly eroded its privacy protections.

What's next: Regulators hope their tough message to Facebook will deter other companies from similar behavior. But they have to win in court for that message to stick.

Go deeper:

Go deeper

Jan 29, 2021 - Technology

Facebook seeks a new head of U.S. public policy

Illustration: Sarah Grillo/Axios

Facebook is looking externally for a new U.S. policy chief as it moves Kevin Martin, a Republican who now holds the job, to a different position, per a memo seen by Axios.

Between the lines: Facebook is moving on from the Trump era in which Republicans held most of the power in Washington and Facebook was particularly eager among tech companies to forge warm relations with GOP policymakers.

App rush: Talent over trash

Data: Knight First Amendment Institute at Columbia University. Chart: Michelle McGhee/Axios

Amid the sea of pollution on social media, another class of apps is soaring in popularity: The creators are paid, putting a premium on talent instead of just noise.

The big picture: Creator-economy platforms like Patreon, Substack and OnlyFans are built around content makers who are paid. It's a contrast to platforms like Facebook that are mostly powered by everyday users’ unpaid posts and interactions.

Jan 29, 2021 - Technology

Facebook developing a tool to help advertisers avoid bad news

Photo Illustration: Avishek Das/SOPA Images/LightRocket via Getty Images

Facebook on Friday said it's testing new advertiser "topic exclusion controls" to help address concerns marketers may have that their ads are appearing next to topics in Facebook's News Feed that they consider bad for their brand.  

Why it matters: As Axios has previously noted, the chaotic nature of the modern news cycle and digital advertising landscape has made it nearly impossible for brands to run ads against quality content in an automated fashion without encountering bad content.

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