Antitrust investigation gives competitors chance to air complaints about Facebook’s hardball tactics
Facebook Inc. FB -1.93% for most of the past decade was Silicon Valley’s 800-pound gorilla, squashing rivals, ripping off their best ideas or buying them outright as it cemented its dominance of social media.
Now the knives are coming out.
A number of Facebook’s current and former competitors are talking about the company’s hardball tactics to investigators from the Federal Trade Commission, as part of its broader antitrust investigation into the social-media giant’s business practices, according to people familiar with the matter.
One of them is Snap Inc., SNAP +0.76% where the legal team for years kept a dossier of ways that the company felt Facebook was trying to thwart competition from the buzzy upstart, according to some of those people. The title of the documents: Project Voldemort.
The files in Voldemort, a reference to the fictional antagonist in the popular Harry Potter children’s books, chronicled Facebook moves that Snap officials believed were a threat to undermine Snap’s business, including discouraging popular account holders, or influencers, from referencing Snap on their Instagram accounts, according to people familiar with the project. Executives also suspected Instagram was preventing Snap content from trending on its app, the people said.
In recent months, the FTC has made contact with dozens of tech executives and app developers, people familiar with the agency’s outreach said. The agency’s investigators are also talking to executives from startups that became defunct after losing access to Facebook’s platform in addition to founders who sold their companies to Facebook, according to some of those people.
The discussions have focused on the aggressive growth tactics that propelled Facebook from a social network for college students 15 years ago to a collection of services now used by more than one in four people in the world every day.
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The talks are a sign that the FTC may be trying to put together “a picture of what might be a pattern of behavior to prevent competition to the core Facebook business,” said Gene Kimmelman, a senior adviser at Public Knowledge, a consumer group that focuses on tech issues who was a Justice Department antitrust official in the Obama administration. Discussions with rivals are typical in antitrust probes, said Mr. Kimmelman, who isn’t involved in the case.
Inside Facebook, senior leaders are concerned about the possibility of rivals divulging damaging information to federal officials and have discussed ways to improve the company’s relationships around Silicon Valley, according to a person familiar with the discussions.
Facebook has previously said that its acquisitions fuel innovation, rather than stifle it, and a spokeswoman said the company’s addition of new services and features over the years gives consumers more choices.
“This is competition at work and one of the longtime hallmarks of the tech sector,” she said. “Businesses continually build and iterate on concepts and ideas in the marketplace—making them better or taking them in different directions. This is good for consumers.”
The FTC investigation is one of several antitrust probes into Facebook and major tech giants in the U.S. and around the world. Earlier this month, the House Judiciary Committee requested Facebook executive communications about the company’s decisions to buy the photo- and video-sharing network Instagram in 2012 and the messaging app WhatsApp in 2014. Lawmakers have contacted several of those companies’ rivals as part of that probe, The Wall Street Journal reported previously.
The House panel can’t take enforcement actions against the companies. The FTC, however, can.