Antitrust investigations are targeting tech companies, and this time it is coming after Facebook. The United Kingdom's competition watchdog is now preparing to open one against Facebook in the next few months.
Facebook under antitrust investigation
According to the Financial Times, the Competition and Markets Authority or CMA reportedly plans to look into whether the social media giant harnesses user data to give itself an advantage over its rivals in the social media and online advertising markets.
The UK may investigate the Marketplace classified ads service, which the European Commission has targeted too.
The timing and the scope of the CMA investigation could eventually change. Facebook has declined to comment over the matter when Engadget reached out for a statement.
This year, the CMA has opened investigations into Apple's App Store fees and Google's plan to remove third-party tracking cookies. Meanwhile, a CMA department called the Digital Markets Unit or DMU will get up and running in April.
The DMU is tasked with creating and enforcing a code of conduct for major tech companies. The likes of Google, Facebook, and Apple are not safe from the antitrust scrutiny on the other side of the globe.
The Federal Trade Commission and dozens of attorneys general laid charges against Facebook last year. They are looking to unwind Facebook's purchases of WhatsApp and Instagram. The company has since filed to dismiss the charges.
Google is also facing multiple antitrust lawsuits from attorneys general and the Justice Department.
Meanwhile, Apple is battling Epic Games in another antitrust lawsuit.
What is an antitrust lawsuit?
Antitrust laws were created by Congress to preserve competition among businesses and prevent any one business from dominating its respective industry and creating a monopoly, eventually undermining the other businesses.
When businesses compete and monopolies are prevented from happening, companies have strong incentives to operate efficiently, keep the prices down and keep the quality up, according to the FTC.
Antitrust laws are the pillars that support the capitalism in the United States, and other countries in the world. The first antitrust law, called the Sherman Antitrust Act, was passed in 1890.
Today, the Sherman Act, the Federal Trade Commission Act, and the Clayton Act all work together to make sure that there is fair competition across the economy.
The Sherman Antitrust Act is a law that prevents groups of businesses from working together or merging to create a monopoly to control the pricing in a single market.
The Federal Trade Commission Act was passed in 1914 and this law made the Federal Trade Commission or FTC as an independent government agency that is tasked with enforcing consumer protection and antitrust laws.
The Clayton Antitrust Act was also passed in 1914 and the Clayton Act regulates business activities and it defines the unethical business practices, including the creation of monopolies.
When a company is suspected of behavior that infringes on any of the three laws, the federal government or state governments may file an antitrust lawsuit against the company. This is what Facebook, Google and Apple are currently facing.
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Written by Sieeka Khan
