WHAT’S HAPPENING WITH FACEBOOK

Facebook

Undisputed Legal | Process Service

For more than five hours on October 4th, a critical part of the world’s social media landscape was down due to an error in the routers that coordinate traffic to Facebook‘s data centres. The outage re-ignited demands for federal antitrust changes that might decapitate the rapidly expanding internet behemoth.

The catastrophic, if only temporary, failure of the business left millions without access to a single communications tool. Because of its monopoly on three of the world’s social communications markets, consumers have no other choice than to utilise Facebook.

WHEN FACEBOOK FAILED

Facebook’s systems are set up to check for errors, but an audit tool that was supposed to block the command that triggered the outage had a flaw, according to the firm. Furthermore, malicious behaviour was not to blame for the outage.

Unfortunately for Facebook, the system breakdown occurred just as the corporation was coming under fire from Congress for allegedly prioritising profits above user safety, an accusation disputed by Facebook.

WhatsApp, major messaging service with over two billion users, was disabled for consumers and internal tools were also restricted for workers.  For Facebook engineers, the problem was made much worse since the outage disabled the tools they usually use to analyse and fix failures of this kind. Indeed, it was necessary to send engineers to the data centres to fix it, a task made harder since it took the business a long time to get engineers inside to work on the servers because of the tight security measures in place.

Even when the data centres’ network connection was restored, Facebook said it was concerned that a spike in traffic might cause the company’s websites and applications to go down.

According to Facebook, a mistake during regular maintenance on the company’s data centre network was to blame for the worldwide system failure on Monday that lasted over six hours and created a flood of issues that prolonged the repair process. Web monitoring company Downdetector claimed the outage was the worst it has ever seen. Billions of Facebook (FB.O), Instagram (IGS.O), and WhatsApp (WAP) users were denied access to their applications as a result, and the corporation has been under fire for weeks now.

FRANCES HAUGEN’S TESTIMONY

For years, Facebook has battled accusations that it has a monopoly on social networking. A request to dismiss the Federal Trade Commission’s (FTC) complaint accusing Facebook of squashing its competitors was also submitted by Facebook’s attorneys on Monday as its engineers raced to repair its server problems.

A former Facebook employee turned whistleblower testified before the U.S. Senate on Tuesday, accusing the corporation of prioritising profits above user safety, a charge the company rejects. Facebook owns Instagram as well as WhatsApp. Employee Frances Haugen stressed the fact that  that ‘Facebook’s closed design means it has no oversight — even from its own Oversight Board, which is as blind as the public.’

That makes it impossible for regulators to serve as a check. Haugen’s argument centred around the fact that Facebook has had incidents of rampant violence on the platform, and maintained that Facebook had done too little to prevent its platform from being used by people planning violence. This is owing to the fact that Facebook was used by people planning mass killings in Myanmar and in the Jan. 6 assault by Trump supporters who were determined to toss out the 2020 election results.

October 3rd, on ‘60 Minutes,’ Frances Haugen, in her capacity as a former Facebook data scientist, came forward not only to acknowledge that she was the whistle-blower who had leaked the documents. Additionally, she revealed they formed the basis of at least eight complaints that she and her lawyers had filed with the Securities and Exchange Commission. 

As the main product manager on the civic-integrity team, Haugen worked for Facebook for almost two years until the firm combined the two teams into a single department. The day following the Facebook outage, on October 5th, Haugen spoke before the Senate Committee on Consumer Protection, Product Safety, and Data Security for more than eight hours. In her testimony to the Senate, she said, ‘Almost no one outside of Facebook understands what occurs within Facebook.’ since ’the corporation deliberately conceals critical information from the general public, the United States government, and governments worldwide.’

WHERE THE FTC COMES INTO PLAY

There is renewed interest in the antitrust case filed by the Federal Trade Commission (FTC) against Facebook after the widespread social media outrage, which was allegedly triggered by an error on Facebook routers.

The Federal Trade Commission (FTC) is now involved in a battle to solve Facebook’s underlying issue, which shows monopolistic tendencies. This market inequity is addressed in part by the antitrust case now pending in the courts.  ‘Antitrust’ refers to laws enacted by governments to prevent companies from becoming monopolies in order to maintain healthy competition. So, for example, if a company buys out several of its best rivals, it would be in violation of antitrust rules since it would have dominance in the relevant industry.

Four months after successfully having a previous lawsuit dismissed, Facebook Inc. filed a fresh petition on October 4th  seeking the dismissal of a federal antitrust action claiming the corporation engaged in illegal monopolisation. There are allegations that Facebook illegally maintained its dominant position by acquiring potential rivals like the messaging platform WhatsApp and image-sharing app Instagram. The company’s submission to a federal court in Washington, D.C., is the newest counterattack against the Federal Trade Commission, which first sued Facebook in December. It is the commission’s goal to undo the arrangements that have been made. 

By filing a lawsuit on December 9th, 2020, the Federal Trade Commission claimed that Facebook was unlawfully preserving its social networking monopoly by engaging in anticompetitive behaviour for many years. After a thorough investigation conducted in collaboration with a group of attorneys general from forty s states, the District of Columbia, and Guam, the complaint claims that Facebook has employed a systematic strategy to eliminate competition, along with its 2012 acquisition of up-and-coming rival Instagram, its 2014 acquisition of mobile messaging app WhatsApp, and the encroachment of anticompetitive circumstances on third-party software developers. This behaviour hurts competition, reduces consumer choice in personal social networking, and denies marketers the advantages of competition in the marketplace.

This could include, among other things, the requirement of divestitures of assets such as Instagram and WhatsApp, the prohibition on Facebook imposing anticompetitive conditions on software developers, and the requirement for Facebook to seek prior notice and approval for any future merger or acquisition. 

According to the lawsuit filed with the FTC, Facebook has its sights set on prospective competitors who could challenge its hegemony. At a time when users of individual social networking services were moving from desktop computers to smartphones and when people were progressively adopting photo-sharing, Instagram appeared. Additionally, it was claimed Facebook officials, including CEO Mark Zuckerberg, soon realised that Instagram was a dynamic and creative personal social network that posed an existential threat to Facebook’s monopolistic power.

WHY INSTAGRAM AND WHATSAPP ARE RELEVANT

Instagram’s purchase by Facebook for a billion dollars in April 2012 reportedly neutralises Instagram’s immediate threat while also making it increasingly impossible for another personal social networking rival to acquire size.

When ‘over-the-top’ mobile messaging applications first appeared, Facebook apparently saw them as a significant challenge to its dominance. Facebook’s leadership was aware—and concerned—that a successful mobile messaging app might join the personal social networking market by adding new features or by spinning off a separate personal social networking app, according to the lawsuit, which cites internal emails and documents.

WhatsApp was the obvious worldwide ‘category leader’ in mobile messaging by 2012. Again, according to the lawsuit, Facebook decided to purchase WhatsApp for nineteen billion dollars in February 2014 rather than compete with a growing danger. With the purchase of WhatsApp, Facebook reportedly neutralises any future threats to its personal social networking monopoly, as well as making it more difficult for any new competitors to establish a foothold in mobile messaging.

This is something Facebook strongly disputes, claiming that it has earned its current position on the merits by providing users with things they want for free. Earlier this year, a federal judge dismissed the first FTC case against Facebook after finding that the agency had not made enough allegations to back up its argument that the social media giant had broken the law.

According to the court, the agency was given one more shot to prove its case. As a result of the FTC’s first complaint, Facebook claims that a deficit still exists. It argued that the FTC’s claims that the business is a monopolist are unsupported by statistics.

‘A litigation-driven fiction at odds with the business reality of strong competition with surging rivals like TikTok and scores of other attractive choices for customers,’ was a major argument during this case.

In its second complaint, the FTC provided a more in-depth explanation of why it thought Facebook was abusing its market power to stifle any competitors who could pose a danger to its dominance. While claiming Facebook used ‘strong-arm methods’ to hurt competitors by blocking third-party app developers from accessing its platform, the latest lawsuit also argues that Facebook wanted to acquire rivals rather than compete with them.

THE NEED TO UPDATE ANTI-TRUST LEGISLATION

Long-standing demands by a bipartisan coalition of U.S. legislators to modernise the country’s rules regulating monopolies in order to properly regulate—or possibly split up— the business have gained new urgency in light of the outages and Haugen’s testimony and appearance on 60 Minutes Sunday.

Since the Clayton and Sherman Acts were enacted more than a century ago, not much has changed in terms of American antitrust legislation. Republicans and Democrats, for various reasons, have increasingly criticised the growth of Big Tech in recent years. Market concentration, according to Democrats, harms consumers in the long run, while Republicans believe that big digital firms may use their market dominance to stifle some forms of free expression.

As a result of existing antitrust rules, the impact of a company’s saturation on consumer prices is given precedence. Because Facebook generates money from advertising and is free for users, regulatory agencies have a hard time enforcing conventional monopoly restrictions due to the financial effect on users. However, there are encouraging indications that things may improve in the near future.

Six antitrust reform measures were advanced by the House Judiciary Committee in June, including one that would prohibit internet firms from buying up growing rivals and another that would prevent big tech from giving their own goods priority over competitors’ products. It took the committee over 20 hours to mark up this package of legislation because of disagreements over how to effectively restructure the space.

HOW FACEBOOK IS RETALIATING

US antitrust regulators want to compel Facebook to sell Instagram and WhatsApp as part of a revamped antitrust lawsuit, which the social media giant is fighting. 

The company maintained that FTC failed to establish a ‘plausible factual basis for labelling Facebook an illegal monopolist.’ This led Facebook to state that there is ‘no foundation’ to claim that Facebook has or had a monopoly. A dismissal with a prejudice request from Facebook would make it more difficult for the agency to modify its case.  Facebook said on October 4th that Judge Boasberg had erred in dismissing such arguments.

Lina Khan, the FTC’s new chairperson, was a major contender for Facebook’s request for dismissal. Because of her past criticism of big internet firms, Facebook claimed that Ms Khan was biased when she joined the FTC and had concluded that the corporation had broken the law. Facebook Inc. thus wants Federal Trade Commission Chair Lina Khan to be recused from participating in decisions about the agency’s monopoly lawsuit against the company, saying her past criticism of Facebook means she’s biased. The request stems from Facebook’s citation of Ms Khan’s barred from any involvement in the antitrust case, citing her academic writings and her work on a House committee that investigated tech companies, including Facebook.

The FTC had rejected a recusal petition submitted by Facebook prior to the current action, stating that the business enjoyed sufficient constitutional due-process protections since the FTC’s case would be handled by a federal court.

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Sources

1. In a blog post, Facebook Vice President of engineering Santosh Janardhan explained the company’s engineers issued a command that unintentionally disconnected Facebook data centres from the rest of the world.

2. ‘Facebook Explains Error That Caused Global Outage.’ The Guardian, Guardian News and Media, 5 Oct. 2021, https://www.theguardian.com/technology/2021/oct/05/what-caused-facebook-whatsapp-instagram-outage. 

3.‘The company’s leadership knows how to make Facebook and Instagram safer but won’t make the necessary changes because they have put their astronomical profits before people. Congressional action is needed,’ Frances Haugen, the former employee, said at a U.S. Senate hearing

4. Roberts, Molly. ‘Opinion | What the Facebook Blackout Taught Us.’ The Washington Post, WP Company, 5 Oct. 2021, https://www.washingtonpost.com/opinions/2021/10/05/what-facebook-blackout-taught-us/. 

5. Mac, Ryan. ‘Who Is Frances Haugen, the Facebook Whistle-Blower?’ The New York Times, The New York Times, 5 Oct. 2021, https://www.nytimes.com/2021/10/05/technology/who-is-frances-haugen.html. 

6. ‘The company’s leadership knows ways to make Facebook and Instagram safer and won’t make the necessary changes because they have put their immense profits before people. Congressional action is needed,’ she will say. ‘As long as Facebook is operating in the dark, it is accountable to no one. And it will continue to make choices that go against the common good.’

7. ‘This inability to see into the actual systems of Facebook and confirm that Facebook’s systems work as they say is like the Department of Transportation regulating cars by watching them drive down the highway,’ her testimony says. ‘Imagine if no regulator could ride in a car, pump up its wheels, crash test a car, or even know that seat belts could exist

8. She added, ‘Facebook wants you to believe that the problems we are talking about are unsolvable. They want you to believe in false choices. They want you to believe that you must choose between a Facebook full of divisive and extreme content or losing one of the most important values our country was founded upon, free speech. . . . That to be able to share fun photos of your kids with old friends you must also be inundated with anger-driven virality. They want you to believe that this is just part of the deal. I am here today to tell you that that’s not true.’

9. New York Democratic Attorney General Letitia James announced the state’s lawsuit, which includes the District of Columbia and Guam. It was also filed in Washington, D.C.

10. ‘FTC Sues Facebook for Illegal Monopolization.’ Federal Trade Commission, 18 Mar. 2021, https://www.ftc.gov/news-events/press-releases/2020/12/ftc-sues-facebook-illegal-monopolization. 

11. The Clayton Antitrust Act of 1914 (Pub.L. 63–212, 38 Stat. 730, enacted October 15, 1914, codified at 15 U.S.C. §§ 12–27, 29 U.S.C. §§ 52–53), is a part of United States antitrust law with the goal of adding further substance to the U.S. antitrust law regime; the Clayton Act seeks to prevent anti-competitive practices in their incipiency.

12. The Sherman Antitrust Act of 1890 (26 Stat. 209, 15 U.S.C. §§ 1–7) is a United States antitrust law that prescribes the rule of free competition among those engaged in commerce.

13. Lerman, Rachel. ‘Analysis | the Technology 202: Congress Takes Aim at Antitrust Legislation Designed to Reel in Big Tech.’ The Washington Post, WP Company, 24 June 2021, https://www.washingtonpost.com/politics/2021/06/24/technology-202-congress-takes-aim-antitrust-legislation-designed-reel-big-tech/. 

14. ‘Takeaways from the Latest Proposed Competition Legislation.’ Law360, https://www.law360.com/consumerprotection/articles/1428001/takeaways-from-the-latest-proposed-competition-legislation.

15. Bloomberg.com, Bloomberg, https://www.bloomberg.com/news/articles/2021-07-14/facebook-wants-ftc-chair-khan-recused-from-antitrust-case.

16. Ms. Khan shouldn’t have taken part in the second case, according to the business, and it should be rejected for that reason.

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