New Jersey brothers who made 60 million robocalls to sell cesspool cleaners must pay $1.66 million penalty

Unknown caller / robocall
The FTC’s Telemarketing Sales Rule requires telemarketers to disclose the seller’s identity.

  • Three New Jersey brothers settled for $1.66 million after making 59.6 million robocalls.
  • “Hello, this is not a sales call or a solicitation,” the robocalls began.
  • About 63% of the numbers called were on the National Do-Not-Call Registry.
  • See more stories on Insider’s business page.

Three New Jersey brothers will pay $1.66 million to settle a federal lawsuit that said they made 59.6 million robocalls.

Environmental Safety International, run by Sean and Joseph Carney, and telemarketing company Carbo, run by Raymond Carney, were using the calls to sell cesspool and septic-tank cleaning products, the Justice Department said on Friday.

The DOJ said the three Carney brothers agreed to a civil penalty of $10.2 million, most of which was suspended. They’ll instead pay $1.66 million, along with forfeiting $774,000 in property. They also agreed not to collect $164,402 in unpaid customer balances.

Working cooperatively, the two companies made millions of unlawful telemarketing calls between January 2018 and December 2020, according to the Federal Trade Commission.

The government said in its complaint that the calls were made in two groups. The first was 45 million calls, followed nine months later by another 14.6 million calls.

More than 37.7 million calls, or about 63%, were made to numbers listed on the National Do-Not-Call Registry, according to a complaint filed in federal court earlier this month.

“Hello, this is not a sales call or a solicitation,” the robocalls began, according to a transcript in the complaint. “We’re calling from an environmental company with information for all septic tank and cesspool owners.”

They added: “We would like to give you some free info on our environmentally safe, all-natural septic-tank cleaning product.”

President George W. Bush laughing before signing a bill at the White House in 2003
Former President George W. Bush signing the National Do-Not-Call Registry bill at the White House in 2003.

If customers pressed “1” during the , they were put into a pipeline that led them eventually to a live telemarketer offering Environmental Safety International’s products, the government’s lawsuit said.

The cleaning products were called the “Activator 1000” and “Activator 2000.”

The DOJ complaint said the calls violated the FTC’s Telemarketing Sales Rule, which requires telemarketers to disclose the seller’s identity. It also requires callers to skip numbers on the Do-Not-Call Registry.

“The Department of Justice is working together with the FTC to prevent the scourge of robocalls that harass and invade the privacy of millions of people every day,” said Brian M. Boynton, acting assistant attorney general at the Justice Department.

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Biden’s executive order aims to stop businesses suppressing workers’ wages

Biden
President Joe Biden.

  • Biden will issue an executive order Friday designed to stop firms collaborating to suppress wages.
  • He will push the FTC and DOJ for tougher guidance to stop companies sharing wage and benefit data.
  • Biden will call on the FTC to ban or limit non-compete agreements, per notes from the White House.
  • See more stories on Insider’s business page.

President Joe Biden is set to crack down on employers who collaborate to suppress workers’ wages in an executive order scheduled for Friday.

The White House published details of the upcoming order Friday morning. Biden will push the Federal Trade Commission (FTC) and the Department of Justice (DOJ) to “prevent employers from collaborating to suppress wages or reduce benefits” by sharing wage and benefit information with each other.

The executive order will say that workers may be “harmed” by existing DOJ and FTC guidance that allows third parties to make wage data available to employers in certain circumstances without triggering antitrust scrutiny, per the White House’s notes.

Workers’ wages tend to decrease when there are fewer employers competing with each other for their labor, according to research from the University of Pennsylvania.

Read more: 20 sought-after female political strategists to watch as more women in the US enter politics

The order, which focuses on promoting economic competition, will aim to help more businesses break into markets dominated by large employers, which it says should give workers more chance to negotiate higher pay.

The president has urged Congress to pass the Protecting the Right to Organize Act, which would include protections for workers who want to unionize and collectively bargain for better pay.

In Friday’s order, Biden will also call for the FTC to ban or limit non-compete agreements and “unnecessary, cumbersome” occupational licensing restrictions. These would make it easier for workers to change jobs and help raise wages, per the White House’s briefing notes.

Tens of millions of Americans, including people working in construction and retail, have to sign non-compete agreements as a condition of getting a job, which makes it harder for them to switch to better-paying options and “stifles” competition, the order will say, per the White House.

It will also say that nearly 30% of jobs in the US require an occupational license, and that there is huge disparity in license requirements between states, which makes it difficult for people to move between states.

Biden has appointed Lina Khan, a vocal critic of big tech, as FTC chair in a decision widely thought to signal his administration’s desire to bring in strict antitrust rules to prevent tech companies from monopolizing markets.

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Amazon really doesn’t like the FTC’s new chair

Lina Khan during a Senate meeting in April 2021.
Lina Khan during a Senate meeting in April 2021.

  • Amazon is not a fan of Lina Khan, a vocal big tech critic who now leads the FTC.
  • The company filed a request to have her removed from any enforcement decisions involving Amazon.
  • In 2017, Khan wrote a widely-read paper about how Amazon has escaped antitrust scrutiny.
  • See more stories on Insider’s business page.

Amazon really doesn’t like the Federal Trade Commission’s new leader.

The company on Wednesday filed a 25-page request to the FTC to have Lina Khan removed from any enforcement decision involving Amazon. That would include the FTC’s current review of Amazon’s $8.45 billion acquisition of MGM, as well as an antitrust investigation into the company that is already in process.

Amazon says there’s a conflict of interest because Khan has been publicly critical of large tech companies, especially Amazon, in the past.

“Given her long track record of detailed pronouncements about Amazon, and her repeated proclamations that Amazon has violated the antitrust laws, a reasonable observer would conclude that she no longer can consider the company’s antitrust defenses with an open mind,” Amazon said in the filing, which was published by Axios and also reported by Bloomberg and the Wall Street Journal.

An FTC spokesperson declined to comment, saying petitions and letters to the FTC are not public.

Khan gained notoriety in the tech and antitrust law worlds after she wrote a paper in 2017 titled “Amazon’s Antitrust Paradox.” She said the current antitrust framework is outdated, which enabled the company to evade antitrust scrutiny, despite growing rapidly and using predatory pricing.

She also made the argument in the paper for what it will look like if Amazon were to be broken up.

Amazon also said Khan is biased because she helped the House investigate Amazon and other big tech firms over online competition. After lawmakers conducted the months-long probe, they released a report calling tech companies “the kinds of monopolies we last saw in the era of oil barons and railroad tycoons.”

President Joe Biden appointed the 32-year-old Big Tech critic to the post earlier this month, and antitrust reformers rejoiced that a vocal anti-monopoly advocate would be helming the agency.

Many dubbed Khan “Big Tech’s biggest nightmare” as the industry, which long operated with little regulatory oversight, may soon be put in its place

Amazon did not immediately respond to a request for comment.

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Facebook is now worth $1 trillion after a US court’s dismissal of 2 antitrust lawsuits spurs jump in stock

Facebook CEO Mark Zuckerberg Testifies Before The House Financial Services Committee
Facebook CEO, Mark Zuckerberg.

  • Facebook hit a $1 trillion valuation for the first time on Monday after an antitrust court victory.
  • A US judge dismissed two lawsuits lodged against Facebook by the FTC and state attorneys general.
  • The social-media giant is the youngest of five US companies to reach the trillion-dollar milestone.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Facebook leapt into the $1 trillion territory on Monday after an antitrust court victory helped its stock reach that valuation for the first time, making it the fifth US company to achieve the milestone.

The social-media giant’s stock closed 4.2% higher on Monday at $355.64 per share, after a US federal judge dismissed two complaints filed against the company in December by the Federal Trade Commission and a group of state attorneys general.

The ensuing rally lifted Facebook into the trillion-dollar club as markets gave the court win a huge “like,” and boosted the rest of the tech sector, said Jeffrey Halley, a senior market analyst at OANDA.

US District Judge James Boasberg in Washington ruled that the FTC failed to support its claims that Facebook held monopoly power as it controls more than 60% of the social-networking market. However, the antitrust and consumer protection agency has 30 days to refile its complaint and try again.

Social networking “services are free to use, and the exact metes and bounds of what even constitutes a [social networking] service – i.e., which features of a company’s mobile app or website are included in that definition and which are excluded – are hardly crystal clear,” Boasberg said in the ruling dismissing the FTC’s complaint.

“The FTC’s inability to offer any indication of the metric(s) or method(s) it used to calculate Facebook’s market share renders its vague ‘60%-plus’ assertion too speculative and conclusory to go forward,” he added.

The judge separately dismissed a lawsuit brought by 46 states challenging Facebook’s purchase of Instagram and WhatsApp, on grounds that they waited too long to put forward their claims. The states’ attorneys general argued that Facebook had acquired those companies to stifle competition from emerging social-media rivals.

Facebook, co-founded by Mark Zuckerberg in 2004, is the youngest of five US companies to hit the $1 trillion milestone, after just 17 years of existence. The Menlo Park, California-based company’s all-time-high market valuation sees it join other tech leaders Apple, Microsoft, Amazon, and Google parent Alphabet in reaching the 13-digit mark.

Facebook’s stock has added more than $592 billion in value since it hit a March 2020 market-cap low of about $416 billion. Its gains have been aided by people increasingly relying on its platform for staying in touch with friends, family, and businesses during the COVID-19 pandemic.

Read More: BANK OF AMERICA: Buy these 7 stocks to capture the investing frenzy as ETF inflows are on track for a record-breaking year

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Meet the millennial dubbed the leader of ‘hipster antitrust’ who got appointed to police Big Tech largely off just one scholarly paper inspired by a trip to the grocery store

now-FTC chair lina khan speaks during a meeting in April
Lina Khan speaks during an April Senate meeting.

  • FTC chair Lina Khan is a graduate of Yale Law School and the author of “Amazon’s Antitrust Paradox.”
  • Her paper and other government work have cemented her as a vocal critic of Big Tech.
  • Khan helped the House investigate Google, Amazon, Apple, and Facebook over online competition.
  • See more stories on Insider’s business page.

Lina Khan has been one of Big Tech’s biggest critics – and she just took the reins of the government agency empowered to enforce antitrust laws against them.

At 32-years-old, Khan is the youngest person to be appointed as chair of the Federal Trade Commission. She was confirmed to the post on June 15 as one of the agency’s five commissioners.

Khan has a rare background for someone assuming such an influential role in US government: an extensive knowledge of tech companies and how complex antitrust laws could apply to them. Some pro-Big Tech players already appear concerned, Vox reported, as the industry has long operated without strict regulation.

Khan attended Yale Law School and has been critical of Amazon

FTC chair Lina Khan in her home
Lina Khan in her home in 2017, the year she published her paper entitled “Amazon’s Antitrust Paradox.”

Khan was born in the UK and moved to the US when she was 11. She initially wanted to be a journalist but delved into examining corporate monopolies and antitrust laws after graduating from Williams College in Massachusetts. Khan became a policy researcher at an antitrust think tank in Washington in 2011.

She told the BBC in January that she realized “markets had come to be controlled by a very small number of companies” and said that trend was “systemic” in the US. Khan was particularly inspired by a trip to the grocery store in 2013 when she realized the candy selection was largely owned by just two or three confectioners.

“I think there is a very coherent story to be told about how market power is harming us as a whole in all these bizarre ways that are not readily apparent,” she told Time in 2019.

She later decided to study law at Yale Law School. In 2017, during her time as a student there, Khan published a paper called “Amazon’s Antitrust Paradox,” drawing attention to the current “unequipped” and unnuanced antitrust framework. She wrote that it enabled the tech giant to evade antitrust scrutiny.

She specifically said Amazon has focused on growing rapidly and using predatory pricing, which has helped it evade government scrutiny since the consumer stays unharmed.

Current US antitrust law stipulates that companies should be scrutinized when their bloated market power directly harms consumers, like if prices increase for them. But Khan instead says there are other, less obvious negative side effects that result from a small number of monopolies holding so much dominance – even if the consumer goes unharmed – like firms harnessing their market power to squeeze out smaller competitors.

The paper was widely publicized and cemented Khan as “Amazon’s antitrust antagonist,” as The New York Times wrote in late 2018. Then-Republican Sen. Orrin Hatch criticized Khan’s paper and dubbed her the leader of the “hipster antitrust” movement.

She’s become a vocal critic at large of big players in the tech world and has advocated for stronger anticompetitive regulation, an issue that has bipartisan support.

Republicans and Democrats agree that the tech industry should abide by a set of rules, though each party has its own motivations to strengthen regulation.

Lawmakers on both sides of the aisle, like Sen. Elizabeth Warren and Republican Sen. Josh Hawley, have supported her ideology, and Sen. John Thune of South Dakota was one of the 21 Republicans that backed her FTC confirmation, NBC reported.

She’s already been helping the US crackdown on Big Tech

Lina Khan during a Senate meeting in April 2021.
Lina Khan during a Senate meeting in April 2021.

Khan was counsel to the House Judiciary Committee’s subcommittee on antitrust, commercial, and administrative law while the group was investigating Google, Apple, Facebook, and Amazon over their role in online market competition. Khan sat behind lawmakers as they questioned the CEOs of the Big Four in a high-profile late July 2020 hearing.

House lawmakers released a report shortly after their months-long probe was complete calling tech companies “the kinds of monopolies we last saw in the era of oil barons and railroad tycoons.”

She also was a legal adviser to now-fellow FTC Commissioner Rohit Chopra.

Khan became an associate professor of Law at Columbia in late 2020. Her faculty page now reads that she is “currently on leave serving in the federal government.”

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Elon Musk impersonators have stolen more than $2 million through crypto scams, FTC says

Elon Musk
  • Scammers impersonating Elon Musk have stolen more than $2 million in the past six months alone, according to the FTC.
  • The number of scams has risen as many attempt to cash in on the cryptocurrency buzz this year.
  • The agency said people in the age group 20 to 49 were five times more likely to report losing money to fraud.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Crypto scammers impersonating Elon Musk have stolen more than $2 million in the past six months alone, according to the Federal Trade Commission. The activity comes amid exploding interest in crypto investing.

The FTC said the fraudulent schemes have many forms, and so-called giveaway scams are among the most common. They’re false setups supposedly sponsored by celebrities who promise to multiply or match the amount of cryptocurrency sent. Under such a scam, people send cryptocurrency directly into the scammers’ wallets.

It may not come as a surprise that the Tesla chief is among the figures being impersonated the most given his vocal opinions as a cryptocurrency enthusiast, which also seem to have market-moving effects.

Musk, one of the prominent figures in the cryptocurrency space, has, several times in the past, moved the price of dogecoin, GameStop, and Etsy, among others.

Most recently, bitcoin has been the asset caught in the middle of the billionaire’s tweeting spree. Over the weekend, Musk – the self-proclaimed Dogefather – sent the price of the cryptocurrency plunging after he seemed to have suggested that his electric vehicle company had sold its holdings, and then clarifying that Tesla, in fact, did not.

Read more: ‘Wolf of All Streets’ crypto trader Scott Melker breaks down his strategy for making money using ‘HODLing’ and 100X trade opportunities – and shares 5 under-the-radar tokens he thinks could explode

Since October 2020, nearly 7,000 people have reported losses of more than $80 million on these scams at a median loss of $1,900 – 12 times the number of reports and nearly 1,000% more in reported losses compared to the same period last year.

Another type of ploy, which topped the list as the most lucrative way to obtain cryptocurrencies, is the “investing” scam, FTC said. This typically involves impersonating a government authority or a well-known business.

“Sites use fake testimonials and cryptocurrency jargon to appear credible, but promises of enormous, guaranteed returns are simply lies,” the agency said. “But people report that, when they try to withdraw supposed profits, they are told to send even more crypto – and end up getting nothing back.”

Many told the FTC that they fed cash into bitcoin ATMs to pay fraudsters claiming to be from the Social Security Administration. Coinbase Global, a cryptocurrency exchange, is another commonly referred to business by scammers.

As for the demographic profile of those being people targetted, the agency said people in the age group 20 to 49 were five times more likely to report losing money to scams compared to older age groups.

People 50 and older were far less likely to report losing money, but on an individual basis, reported losses at an average of $3,250.

“Cryptocurrency enthusiasts congregate online to chat about their shared passion,” the agency said. “And with bitcoin’s value soaring in recent months, new investors may be eager to get in on the action.”

Cryptocurrencies have skyrocketed in 2021, hitting a $2 trillion market valuation in April, just three months after it breached the $1 trillion mark. The rally is led by bitcoin, which has grown 51% year-to-date, ether at 354%, and dogecoin at around 10,300%.

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Americans, ready to book vacations again, could be prime targets for scammers, and 2 senators want more protections for travelers

travel tourist bag airport vacation plane luggage
  • Rising vaccination rates means that tourism is on its way back – and so are travel scammers.
  • Sens. Amy Klobuchar and Steve Daines have called on the FTC to do more to protect travelers.
  • “It is critical to ensure that Americans understand how to recognize travel scams and their recourse options,” they wrote.
  • See more stories on Insider’s business page.

With the travel industry poised to boom thanks to rising coronavirus vaccination rates, scammers could very well target would-be travelers in the coming months, spoiling many long-awaited vacations.

Two senators are calling on the Federal Trade Commission to do more to protect tourists from scammers, as travel is slated to spike along with coronavirus vaccination rates. United States Sens. Amy Klobuchar of Minnesota and Steve Daines of Montana sent a letter to the FTC on Thursday asking the commission to bolster protections for travelers and expressing “concern” over reports detailing a proliferation of travel scams.

“While the FTC posts advisories pertaining to travel scams, we believe that more must be done to protect consumers,” the senators wrote. “Travel reservations made on fraudulent websites can be costly and stressful for travelers, and it is critical to ensure that Americans understand how to recognize travel scams and their recourse options should they fall victim to these scams.”

Payments company Flywire found that 7 out of 10 frequent travelers say they’ll likely spend more on travel in 2022. But more tourists also means more scammers looking to prey on travelers. Travel scams could take the form of fraudsters disguised as booking agents or counterfeit tickets being sold online. The FTC’s website warns consumers of rental-listing rip-offs, timeshare tricks, and sweepstakes swindles.

In their letter, the senators also included four specific questions addressed to acting FTC chief Rebecca Kelly Slaughter about the commission’s coordination with the Department of Justice, any additional measures needed to “better protect consumers,” data around travel scams, and “additional resources” that the organization may need to better address travel scams.

The FTC did not immediately respond to Insider’s request for further comment.

This isn’t the first time that Klobuchar has crossed party lines on the issue of tourism. She introduced the Protecting Tourism in the United States Act in February, along with Republican Sen. Roy Blunt of Missouri.

Read the entire letter from Klobuchar and Daines here:

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Facebook asks judge to throw out antitrust lawsuits filed by FTC and state attorneys general

mark zuckerberg congress WASHINGTON, DC - OCTOBER 23: Facebook co-founder and CEO Mark Zuckerberg leaves the Rayburn House Office Building after testifying before the House Financial Services Committee for six hours on Capitol Hill October 23, 2019 in Washington, DC. Zuckerberg testified about Facebook's proposed cryptocurrency Libra, how his company will handle false and misleading information by political leaders during the 2020 campaign and how it handles its users’ data and privacy. (Photo by Chip Somodevilla/Getty Images)
There’s a growing appetite in Congress for increased regulation of internet platforms like Facebook.

  • Facebook motioned to dismiss two antitrust suits filed against the tech giant on December 9.
  • Facebook argues the FTC does not have evidence to prove Facebook broke the Sherman Antitrust Act.
  • The tech giant also said state attorneys general waited too long to file their lawsuit.
  • See more stories on Insider’s business page.

Facebook has motioned to dismiss two lawsuits that aim to break up the tech giant.

The firm filed motions asking to dismiss lawsuits filed by the Federal Trade Commission and 48 state attorneys general on December 9. The suits alleged Facebook neutralizes competitors – like by buying WhatsApp and Instagram – before they can threaten the social media giant’s dominance.

Facebook argued the suits fail to provide enough evidence that the tech giant engaged in anticompetitive practices. For instance, the social media giant does not have monopoly power over prices because it offers products for free, the motion argues.

Regarding the attorney general suit, Facebook argues the states waited too long to act, and cannot prove that Instagram and WhatsApp would have been competitors to the social media giant.

Read more: Wall Street pours cold water on the Facebook breakup party: ‘The courts won’t buy this.’

“Over the many years since the government cleared the Instagram and WhatsApp mergers, this competition has only gotten more fierce, and consumers have benefitted enormously from Facebook’s investments in these free apps,” a Facebook spokesperson said in a statement to Insider. ” The government ignores these realities and attempts to rewrite history with its unprecedented lawsuit.”

The US has threatened to break up tech giants, including Facebook, Apple, Amazon, and Google, for years. The Department of Justice filed an anticipated lawsuit against Google’s alleged exclusionary business deals in October.

Experts previously told Insider the suits are unlikely to lead to a break up of WhatsApp and Instagram from Facebook but will pave the way for greater tech oversight.

President Joe Biden is planning on stacking his administration with antitrust advocates as insiders expect him to strengthen tech regulation.

Read the original article on Business Insider

Biden appoints FTC and FCC acting directors in move that signals a more aggressive approach to regulating big tech

slaugher ftc rosenworcel fcc
FTC acting director Rebecca Kelly Slaughter and FCC acting director Jessica Rosenworcel.

  • Biden picked Rebecca Kelly Slaughter and Jessica Rosenworcel as acting FTC and FCC directors.
  • The two Democrats have been more aggressive regulating big tech in the past than Trump’s appointees.
  • They also favor many of Biden’s stances on issues like internet access, net neutrality, and privacy.
  • Visit Business Insider’s homepage for more stories.

President Joe Biden made two key agency appointments on Thursday that offer an early window into how his administration could approach regulating the tech and telecom industries.

Biden selected Democrat Rebecca Kelly Slaughter as acting director of the Federal Trade Commission and Democrat Jessica Rosenworcel as acting director of the Federal Communications Commission.

Slaughter began her term at the FTC in May 2018, after being nominated by President Donald Trump. Rosenworcel was first nominated to serve on the FCC by President Barack Obama in 2012, and is the longest-serving Democratic commissioner at the agency.

The appointments signal that Biden’s administration will likely continue to get tougher on regulating tech and telecom companies, building on the Trump administration’s mix of increasing antitrust enforcement, attempts to roll back Section 230’s legal protections for internet companies, and laissez-faire approach to telecom regulations.

The outgoing FTC Chairman Joe Simons, a Trump appointee, had begun to ramp up the agency’s antitrust and consumer privacy work, opening several landmark investigations into Facebook, Amazon, Google, and even started looking at past mergers and acquisitions by big tech.

Slaughter has supported the FTC’s increasingly hard line on antitrust issues as well as privacy, but she has also argued the agency should have taken action earlier and issued harsher penalties more likely to deter companies from future law-breaking, including holding executives personally liable for their companies’ privacy violations.

Slaugher has also said that the FTC’s enforcement efforts should be “anti-racist” through ensuring markets aren’t racially discriminatory and protecting consumers from algorithmic bias.

Rosenworcel’s appointment to the FCC, however, marks an even greater departure from her predecessor, the outgoing Chairman Ajit Pai.

A former Verizon lawyer, Pai drew criticism for being overly friendly toward the companies under his agency’s purview, opposing overwhelmingly popular net neutrality rules, and doing little to improve Americans’ internet speeds or ability to access the internet in the first place.

Rosenworcel has pushed for the FCC to use its authority and resources to expand internet access, particularly to students whose lack of home internet has prevented them from keeping up in school while participating in remote learning during the pandemic – the so-called “homework gap.” She has also voiced support for net neutrality in the past, and will likely face pressure to reinstate the policy.

Slaughter and Rosenworcel will likely play a key role in any efforts to modify Section 230, which some Democrats say lets tech companies off the hook for not doing enough to disincentivize hate speech, harassment, and violence on their platforms.

The appointments aren’t final, as Biden will still need to decide whether to nominate Slaughter and Rosenworcel as permanent chairs. They will also likely face delays implementing their more ambitious plans until Biden nominates additional commissioners to break the current 2-2 split between Democrats and Republicans at both agencies.

Both the FTC and FCC are led by as many as five commissioners, appointed by the president, and neither is allowed to have more than three members of one party. Biden’s appointments will need to be confirmed by the Senate, a likely prospect as Vice President Kamala Harris could break any tie between the evenly divided upper chamber.

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Experts say the antitrust suits against Facebook may not change anything, but they’re still a ‘big deal’ and signal that the US government will no longer look the other way

mark zuckerberg facebook
Facebook CEO Mark Zuckerberg in Washington DC on Oct. 23, 2019.

  • Facebook was slammed with two antitrust lawsuits this week — one from the FTC and one from a group of 48 attorneys general — that take aim at the company’s practices of stifling market competition.
  • They also seek to force Facebook’s spin-off of WhatsApp and Instagram, but experts told Business Insider that that’s unlikely to happen, and the suits will likely stretch out for years.
  • What the lawsuits really represent, experts said, is an indication that the government will no longer look the other way when it comes to how Facebook operates.
  • “Every acquisition they try to make from here on will be met with such a level of inspection and skepticism associated with it,” one expert told Business Insider.
  • The lawsuits are the cherry on top of a rocky few months for Facebook as a reckoning in tech looks to be on the horizon.
  • Congress has been investigating Facebook over antitrust concerns, the public has accused the company of allowing the spread of misinformation and hate speech, and Republicans are convinced that the platform is one of many that discriminates against the right.
  • Here’s what the lawsuits mean for Facebook and what they could change.
  • Visit Business Insider’s homepage for more stories.

What happened this week?

The Federal Trade Commission has been in charge of enforcing antitrust laws for decades, and the federal agency filed a lawsuit on Wednesday that seeks to force Facebook to spin off Instagram and WhatsApp. 

Why? Because the commission alleges that when Facebook acquired the two companies, it did so to neutralize them as competitors. As Facebook CEO Mark Zuckerberg said in a 2008 email, unearthed for the first time in the FTC’s lawsuit, “it is better to buy than compete.”

That would be illegal, according to US antitrust laws. (This also isn’t a new accusation – Zuckerberg faced questioning over the same topic in front of Congress in July as part of its investigation into online competition.)

Antitrust laws are designed to prevent firms from using anticompetitive business practices that stifle competition, thereby allowing the companies to dominate the market and hold monopoly power.

The FTC lawsuit accuses Facebook of holding such an “illegal monopolization.” 

In addition to the divestitures, the filings are also seeking to keep Facebook from engaging in anticompetitive conduct. Such conduct could include Facebook preventing competing services from gaining access to its customer base, David Dinielli – an antitrust lawyer and a former special counsel with the antitrust division of the Department of Justice – told Business Insider. The ultimate goal, he said, is to restore competition in the market.

“This is the incredibly strong opening salvo of what could be a multi-year battle,” Dinielli said.

Why is the FTC lawsuit a big deal?

The lawsuit represents a major legal action taken by the US government against Facebook. It also coincides with a separate lawsuit filed by 48 attorneys general that includes similar allegations. 

Dinielli also said an important fact about these filings is that they aren’t political documents but are rather explanations that anyone, regardless of political affiliation, will understand. Regulation of the tech industry has been largely politicized this year, especially as platforms like Facebook began fact-checking President Donald Trump’s online posts.

The suit’s demands that WhatsApp and Instagram be spun off are notable.

Divesting WhatsApp could have a dire impact on the future of the social media company, as Bloomberg’s Kurt Wagner reported. Facebook bet big bucks on the popular mobile messaging platform, and as those types of services continue to veer into the social networking world, a company like WhatsApp will be an invaluable asset. Zuckerberg and Facebook leadership recognized as much, according to internal emails made public as part of the FTC lawsuit. 

Facebook also recognized Instagram as a formidable challenger before it acquired the platform – Zuckerberg wrote in 2012 that it would be “really scary” for Facebook if Instagram remained a standalone competitor.

“It’s kind of ridiculous in and of itself that they bought Instagram in 2012 and now, eight years later, [regulators are] saying, ‘Oh, you shouldn’t have done that,'” Ari Lightman, professor of digital media at Carnegie Mellon and social media expert, told Business Insider.

But that doesn’t mean that investigators will get their way with a WhatsApp-Instagram spin-off. 

Will anything change because of the lawsuit?

Experts say, not really.

Wall Street analysts told Business Insider’s Martin Coulter that the lawsuit might not actually have legs to hold up in court, and a spinoff of Instagram and WhatsApp is unlikely to happen, Lightman said.

“If you break them up now, are you going to give them a refund check?” Lightman said. There are so many integrated assets, from engineers and executives to user data, so the question is how does that even begin to be unraveled, according to Lightman.

Experts said what the lawsuit really represents is being part of a series of governmental actions signaling the broader consensus that the industry needs oversight.

“It’s time to take all of these companies seriously, both in terms of the incredible benefits they’ve provided to our economy, to the marketplace of ideas and to our personal lives, but also the problems that they pose for those same things,” Dinielli said.

And Lightman said “every acquisition they try to make from here on will be met with such a level of inspection and skepticism associated with it.” What Facebook needs is better legislation that applies to them specifically as internet platforms, according to Lightman.

He also said Facebook will spend “a lot of money, a lot of resources, a lot of time, a lot of energy fighting this thing,” leaving the door open for other competitors to catch up with their own innovations.

The lawsuits come after a tumultuous year for Facebook

Both the FTC’s suit and that filed by 48 attorneys general come on the heels of a rocky few months for Facebook, as a reckoning in tech looks to be on the horizon.

Antitrust scrutiny, accusations surrounding the proliferation of misinformation and hate speech on its platform, election interference, a vendetta against Republicans – it has not been smooth sailing for Facebook this year. Though its problems, of course, stretch back years, when the Cambridge Analytica scandal really kicked off a “techlash” against the company and its industry. 

The House antitrust subcommittee has investigated Facebook, the Senate judiciary subcommittee is mulling over tweaking Section 230 protections, and a greater public discourse around tech regulation has taken hold as online consumers become more aware of the platforms they use every day.

“Running unregulated, unchecked, unsupervised – it’s great for growth in the early days, but now it doesn’t fit the model, and trying to use a blunt hammer, which is 120-year-old piece of legislation, is the wrong answer as well,” Lightman said.

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