Source-BuzzFeed
Monopolies are the sole supplier of goods, services, and all things consumers use, With little to no competition and no price regulations. Due to a lack of competition, monopolies have significant leverage against consumers. As a result, the U.S. Federal Trade Commission (FTC) protects consumers by preventing illicit and unfair business practices that pose unfair advantages to consumers. One of the powers of the FTC is to prevent corporations from becoming monopolies. According to a December 2020 FTC antitrust complaint, Facebook is becoming a social media monopoly, and a U.S. judge has granted the U.S. FTC more time to amend its claim against Facebook. This post will discuss the legal, economic, and business components of mergers and acquisitions by analyzing U.S. District Judge James E. Boasber’s latest ruling, which allowed the FTC’s antitrust lawsuit against Facebook to proceed.
Judge James Boasberg (Judge Boasberg) of the U.S. District Court’s decision to give the FTC more time to amend its claim against Facebook was the right decision. The FTC’s complaint arises from Facebook buying up its competition, such as WhatsApp and Instagram. Such business practices stifle competition and are against consumers’ best interests. These accumulations of start-ups and competition by Facebook have made Facebook more powerful and prominent, thus stifling competition. Judge Boasberg’s decision is imperative for the regulation of anti-competitive business practices. If left unregulated, monopolized companies like Facebook can hinder consumers, businesses, and the economy.
LAWS
Source-Snate.gov
Antitrust laws are statutes created by Congress to protect consumers from unfair business practices. For example, section 2 of the Sherman Act makes it unlawful for any person to “monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several states or with a foreign nation.” Therefore section 2 of the statute establishes three offenses which are “monopolization,” “attempted monopolization,” and “conspiracy to monopolize.” The FTC’s complaint accuses Facebook of breaking antitrust laws by purchasing various social media to impede competition.
Economy/Business
Source-NPR
One of the primary purposes of antitrust laws is to promote a market-based economy. A market economy relies on the principle of supply and demand to determine the appropriate prices and quantities for goods and services in the economy. Thus, competition is imperative for a market-based economy because it promotes innovation, lowers consumer prices, and incentivizes companies to improve the quality of their goods and services. Innovation, prices, and goods and services are suppressed without competition. Antitrust laws are designed to preserve the competitive nature of the economy, thereby incentivizing competition and economic growth.
These accumulations of start-ups and competition by Facebook have made Facebook more powerful and more prominent, thus stifling competition. Judge Boasberg’s decision is imperative for the regulation of anti-competitive business practices. If left unregulated, monopolized companies such as Facebook can hinder innovative start-up social media from kickstarting by having significant leverage in controlling consumers’ access to new social media. Facebook can potentially impede start-ups by controlling consumers’ exposure to new social media platforms and impede profit.
Judge Boasberg’s decision to extend FTC’s complaint is critical in protecting consumers’ access to innovative social platforms. Facebook’s business practices deny consumers alternatives. By buying up its competitors and extending its social leverage, Facebook denies consumers access to different social media with potentially better new ideas and implementations. Facebook monopolization also makes it harder for other social media to compete, thus keeping various social media out of the market.
By keeping various social media out of the market, Facebook will become a monopoly and have significant leverage over the social media industry. Without no alternative for consumers, Facebook can impose harmful conditions on consumers, have considerable leverage in imposing prices, and reduce innovation. Prohibiting monopoly not only harnesses competition but also benefits businesses to thrive by developing new ideas and innovation, resulting in better productivity and output. For example, Uber completely revolutionized the traditional taxi industry in only a few years, thereby reducing consumer costs and generating billions. Airbnb completely revolutionized the renting housing and hotel industry, thereby benefiting consumers and the business model. Competition encourages new ideas, thereby helping consumers and businesses.
Conclusion
Competition is an essential tool for a market-based economy. Thus, the Sherman Act has long stood to preserve competition because it is of the principle that competition will produce not only low pieces but also better goods and services and spur economic and business growth. Monopolization goes against the interest of consumers, thereby hindering economic growth and innovation. Business innovation not only benefits consumers but also creates growth for companies. Innovation is imperative for businesses to grow. Innovation encourages creativity and ideas that can revolutionize the industry, allowing companies to generate more profit and reduce costs. Therefore, Judge James Boasberg’s decision to allow the FTC’s claim against Facebook is essential to preserve the purpose of what the Sherman Act was intended to protect, which is to maintain a competitive environment. Thus, giving businesses incentives to spur economic and business growth,
SOURCES
https://www.documentcloud.org/documents/21177063-memorandum-opinion
https://www.investopedia.com/terms/m/marketeconomy.asp