40 US states plan to sue Facebook next week, report

More than 40 states in the US are planning to file a lawsuit against Facebook next week over possible antitrust violations.

It is not known what points the states want to include in their lawsuit, but experts believe that the legal challenge will certainly involve Facebook's acquisition of Instagram and WhatsApp. Critics argue that Facebook is stifling competition in the market by acquiring smaller rivals, at a high premium.

Facebook, however, denies antitrust allegations, stating that it operates in a highly competitive market and that its acquisitions have actually helped companies like WhatsApp and Instagram to become market leaders.

According to Reuters, the US Federal Trade Commission (FTC) is also considering bringing in a separate but related complaint against Facebook in district court or with an administrative law judge.

Investigators are reportedly looking at the way in which the social media giant manages its user data, and the policies that govern how third-party app developers and other firms can access that data.

The lawsuit against Facebook would be the second major US legal challenge filed against a Big Tech firm in 2020. In October, the US Justice Department (DoJ) sued Google over alleged anticompetitive search and advertising practices that violate federal antitrust laws.

The DOJ said that Google has spent billions of dollars to ensure that its search engine remains the default choice on different browsers and phones. The DoJ asked the court to consider a 'structural relief', under which Google could be asked to sell a portion of its business and stop all practices that regulators find to be unlawful.

The FTC and DoJ last year started an antitrust probe into the four big tech companies, including Amazon, Apple, Google and Facebook, to investigate the challenges posed by the dominance of these companies in the digital economy.

In July this year, a US Congress House Antitrust Subcommittee questioned Facebook CEO Mark Zuckerberg about his firm's strategy of copying rival's app and their features and even threatening to do so as a negotiation tactic amid discussion over potential merger/acquisition.

In response, Zuckerberg admitted that Facebook had "adapted features that others have led in", but denied claims that such tactics were used in an anti-competitive way.

The Antitrust Subcommittee released the findings of its investigation in October, concluding that all big tech firms are effectively monopolies that need to be broken up to restore competition and improve innovation in the industry.

The report argued that these firms are abusing their power to control access to markets and pick winners and losers. It also accused tech giants of imposing harsh contract terms, charging excessive fees and extracting data from customers and businesses.