Why is Facebook facing the antitrust lawsuits?
The antitrust laws are there to protect the consumers from predatory business practices but how did Facebook break them?
The United States Federal Trade Commission and nearly every US state filed lawsuits against Facebook, the social media giant, on Wednesday saying it used a "buy or bury" strategy to snap up rivals and keep smaller competitors at bay.
What are the lawsuits about?
The complaints accuse Facebook of buying up rivals, focusing specifically on its previous acquisitions of photo-sharing app Instagram for $1 billion in 2012.
It then purchased Onavo in 2013, which protected its users from third-party tracking. Facebook has used Onavo to identify other takeover targets. It bought messaging app WhatsApp for $19 billion in 2014, reports Reuters.
Federal and state regulators said the acquisitions should be unwound - a move that is likely to set off a long legal challenge as the deals were cleared years earlier by the FTC.
What does the law say?
Antitrust laws are statutes developed by the government of the United States to protect consumers from predatory business practices.
The laws ensure the existence of fair competition in an open-market economy. Without these laws, consumers would not benefit from different options or competition in the marketplace. With limited options, consumers would be forced to spend more.
How did Facebook break the antitrust laws?
In the lawsuits with the coalition of 46 states, the prosecutors accused Facebook of using dominance and monopoly power to crush smaller rivals, and sniffing out competition at the expense of the users.
Since Facebook's possession of Instagram and WhatsApp, the two apps have skyrocketed in popularity. It gave Facebook control over three of the world's most popular social media and messaging apps.
Facebook is now accused of strategically seeking to buy potential rivals, often at a big premium, before they have a chance to grow.
Jennifer Newstead, Facebook's general counsel, called the lawsuits "revisionist history" saying that the antitrust laws do not exist to punish "successful companies."
She also said that WhatsApp and Instagram succeeded after Facebook invested billions of dollars in growing the apps.