Facebook fends off new anti-monopoly questions after UK email release

Today, documents released by the UK Parliament provided a largely unprecedented, firsthand look inside Facebook. In the documents, executives can be seen responding to the threat of competitors, debating how to handle users’ data, and discussing major changes to its business model. In all, the cache shows a fact about Facebook that’s widely understood, but only occasionally detailed: its decisions have tremendous consequences for businesses that rely on it. The documents are shedding new light on Facebook’s market power, and some experts and lawmakers are already accusing the company of breaking anti-monopoly law through its aggressive control of its platform.

In the documents, companies can be seen pleading with executives after the company changed its policy for data access. “We have been compelled to write to you to explain the hugely detrimental effect that removing friend permissions will cause to our hugely popular (and profitable) applications Badoo and Hot or Not,” a Badoo representative wrote to a Facebook executive. “The friends data we receive from users is integral to our product (and indeed a key reason for building Facebook verification into our apps).”

“Competition sucks, right?”

Facebook later wrote in an email that the company had been “whitelisted” for access, but others didn’t fare as well. When Twitter-owned video app Vine attempted to use Facebook to let users find friends on the platform, Mark Zuckerberg personally sent a terse response when an executive said Facebook planned to shut down the Vine feature. “Yup, go for it,” he wrote, according to the released emails.

Vine co-founder Rus Yusupov echoed the feelings of many prominent Facebook critics in a tweet he sent after the documents were released. “Competition sucks, right?” he wrote. “No. It allows for products to improve, become available to more people, at lower costs. Strive to build new things that people want and influence other creators for the cycle to continue.”

According to Facebook’s critics, those API moves could be violations of federal anti-monopoly law. Freedom From Facebook, a group that’s pressed for antitrust action against the social media giant, claimed the company was “seemingly in violation of antitrust laws, from tying arrangements involving data, to the marginalization and exclusion of competitors from Facebook’s dominant platform, to illegal conditions surrounding Facebook’s acquisition of WhatsApp.” Tim Wu, who coined the term net neutrality, made a similar case on Twitter.

“The revelations about Facebook’s internal considerations on Vine will likely trigger antitrust scrutiny,” said Dipayan Ghosh, Facebook’s former US privacy and public policy advisor. “The company’s actions appear to mirror that of Google’s Android, which blocked rival apps through vigorous anti-competitive behaviors — the same thing applies here.”

Any real enforcement action Facebook could face in response to these allegations would likely come from the Federal Trade Commission. In 2011, the agency issued a consent decree that prohibits the company from deceiving users on their privacy. If the Commission were to decide the company violated the agreement, it could be presented with a hefty fine. The Justice Department also has jurisdiction to prosecute Facebook if the company is found to have violated antitrust law by suppressing its own competitors.

The European Commission already took antitrust action against another major tech company this summer, when it fined Google $5 billion for anti-competitive behavior surrounding its Android product. The Commission found that by bundling features like Google’s search engine, Chrome apps, and operating system, the company was illegally taking advantage of its market share. The Commission could pursue a similar action on behalf of the Facebook allegations, but no statements or announcements have been made.

Zuckerberg said the company was working on “preventing abusive apps”

Few expect US regulators to respond to the new emails directly, but they have inspired some lawmakers to call for more aggressive action against Facebook.

“There is mounting evidence that Facebook acted chaotically, recklessly and lawlessly by granting access to private consumer data for financial gain,” said Sen. Richard Blumenthal (D-CT), a member of the Judiciary Committee. “These new documents show clearly that Facebook failed to heed their consent decree agreement and basic standards of privacy. The FTC must act decisively and vigorously to end this consistent pattern of negligence and disregard for consumer privacy and legal orders.”

Sen. Ed Markey (D-MA) also raised the concern that Zuckerberg may have misled Congress in recent testimony. “Americans’ data belongs to them, not Facebook. When he testified before Congress, Mark Zuckerberg repeatedly insisted that Facebook does not sell its users’ data,” said Markey, a Commerce Committee member. “Any evidence of a pay-for-data model would fly in the face of the statements Facebook has made to Congress and the public.”

In response to the document release, Mark Zuckerberg posted a note on his personal Facebook page. Changes to data access benefited users’ security, he wrote, and “preventing abusive apps” — or “sketchy” ones — was a major reason for changes detailed in the documents. He also hinted at the company’s reasoning for undercutting an app like Vine. “We also didn’t allow developers to use our platform to replicate our functionality or grow their services virally in a way that creates little value for people on Facebook,” he wrote.

In a separate statement, a Facebook spokesperson said the documents “are only part of the story and are presented in a way that is very misleading without additional context.” Facebook says it also believes it’s in compliance with antitrust laws and isn’t required to give unfettered access to competitors.

But the documents also provided a look into how Facebook scrutinizes competition. The company kept “a small list of strategic competitors,” according to the documents, and limited their access to Facebook data. “Any usage beyond that specified is not permitted without Mark level sign off,” the document reads.

source : http://www.theverge.com

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