Federal Trade Commission investigating whether Facebook bought up potential competitors

The US market authority FTC is investigating whether Facebook bought up tech companies before they became big to avoid potential competition. According to the FTC, acquiring such companies could violate competition law.

That writes The Wall Street Journal based on insiders. The investigation would focus on whether Facebook bought up small tech companies to prevent them from taking market share from Facebook. For the investigation, the Federal Trade Commission is said to have spoken with several founders of such tech companies.

In the past 15 years, Facebook has acquired about 90 companies, according to the FTC. This includes social media companies such as WhatsApp and Instagram. Prior to these two acquisitions, the FTC had to grant approval. With the acquisition of Instagram, according to WSJ sources, there were concerns about possible violations of competition law. However, the watchdog was not convinced at the time that it could win a legal battle, the sources add. Smaller acquisitions did not require approval from the FTC, according to the WSJ.

If the FTC finds that Facebook has violated competition law, there are several measures that the watchdog can impose on the company, according to the American newspaper. For example, the FTC may decide that certain acquisitions must operate as independent companies or may impose restrictions on what Facebook can do with the acquisitions. Such measures could lead to lawsuits, according to the American newspaper.

Neither Facebook nor the FTC would comment on the investigation to The Wall Street Journal. However, Facebook reported when the company’s quarterly figures were presented that the watchdog had started an investigation. The FTC also announced in February that it would set up a task force to investigate such acquisitions.

According to the WSJ, an FTC executive said last year that taking over potentially competing companies early is bad for competition in the marketplace. At the time, the director acknowledged that such acquisitions also offer advantages; this would allow larger companies to bring the products to the market more quickly. Also, start-ups could be worth less if large companies have fewer opportunities to acquire them.

This is not the first time the FTC has launched an investigation into Facebook. For example, it was announced last week that Facebook must pay a $5 billion fine for various privacy violations. The company also has to make ‘major changes’ in the corporate structure.

This new FTC investigation has nothing to do with the investigation of the US Department of Justice. This ministry announced last week that it would investigate the market dominance of large tech companies such as Facebook. The focus is on how these platforms came to their power and whether they violated any rules. The US government is also investigating whether new laws should be introduced to combat abuse of power by large tech companies.