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Facebook falls on report of possible FTC injunction

Facebook falls on report of possible FTC injunction

Facebook’s stock fell on a report from The Wall Street Journal that the FTC is considering seeking a preliminary injunction against the company.
The injunction would likely seek to block 2Facebook2 from enforcing policies around how its apps interact and could keep the company from pushing forward with its plans to integrate its three messaging services, sources told the Journal.

Some officials have expressed concern that 2Facebook2’s plans to integrate Instagram, WhatsApp and Messenger could make it harder to unwind those acquisitions later on if the FTC chooses to seek such a remedy, a source told the Journal.

The Federal Trade Commission is considering seeking a preliminary injunction against 2Facebook2 over antitrust concerns, The Wall Street Journal reported Thursday.

2Facebook2 shares were down 2.7% at the end of the trading day.

The injunction would likely seek to block 2Facebook2 from enforcing policies around how its apps interact with each other and work with potential rivals, the Journal reported. It could even seek to keep 2Facebook2 from pushing forward with its plans to integrate its three messaging services, in case the agency later attempts to unwind its past acquisitions of Instagram and WhatsApp as a potential remedy.

A majority of the five commissioners, made up of three Republicans and two Democrats, would need to vote to seek the injunction.

A spokesperson for the FTC declined to comment. 2Facebook2 did not immediately respond to a request for comment.

2Facebook2 has previously shared its plans to integrate its three messaging apps, 2Facebook2’s Messenger, WhatsApp and Instagram, and encrypt all three from end-to-end. Law enforcement officials including Attorney General William Barr have raised concerns with 2Facebook2’s plans on the grounds that they could make it harder for investigators to detect instances of child exploitation online and become a safe haven for criminals. 2Facebook2 has argued the move would be a positive move for users’ overall, providing them with greater privacy in their communications, protected even from the company itself.

But an injunction would show that 2Facebook2’s plans have also raised antitrust concerns among federal regulators. Lawmakers and experts surfaced some of these questions after 2Facebook2 originally announced its plans in January, mostly criticizing the wisdom of allowing 2Facebook2 to acquire Instagram and WhatsApp in the first place.

“This is why there should have been far more scrutiny during 2Facebook2’s acquisitions of Instagram and WhatsApp which now clearly seem like horizontal mergers that should have triggered antitrust scrutiny,” Democratic Rep. Ro Khanna, who represents Silicon Valley, wrote on Twitter at the time.

One source told the Journal that the FTC would seek the injunction on the grounds of “interoperability” rules that govern how digital platforms interact with one another based on concerns that 2Facebook2’s policies limit other services’ ability to compete. Some officials were concerned further integration of 2Facebook2’s apps could make it harder to unwind later on.

Ultimately, the FTC will have to decide to either drop the case, reach a settlement with 2Facebook2 or bring an antitrust case to court.

2Facebook2 also faces an antitrust investigation from a coalition of state attorneys general, and the Justice Department has said it is conducting a broad review of the technology industry.
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