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Facebook Reportedly Faces Possible FTC Lawsuit

By Rich Duprey – Oct 23, 2020 at 10:31AM

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The social networking site is already under investigation by the agency.

Just days after the Justice Department filed an antitrust lawsuit against Alphabet's Google, The Wall Street Journal is reporting that the Federal Trade Commission is considering filing suit against Facebook (META -1.19%), though on what grounds remains unclear.

The Journal says five members of the agency met via videoconference yesterday, but while staffers are recommending an antitrust lawsuit, the commissioners have yet to decide and adjourned without taking action.

Male pointing at global people icons
Laptop user with social media icons floating around

Image source: Getty Images.

The FTC had listed the teleconference on its public calendar, but not what the topic of discussion would be, saying it was discussing a law enforcement matter that has not been made public.

Facebook is also being probed by the agency for possible abuse of its market position to squelch competition. The Journal says areas being investigated include its acquisition of other companies such as Instagram.

The current investigation has taken testimony from CEO Mark Zuckerberg, something the FTC hadn't done previously when it looked into the tech stock's failures on user privacy.

Instagram has grown massively popular, often because it borrowed some of the best ideas created by its rivals, such as Snap's (SNAP -3.51%) Stories feature on Snapchat, and more recently launched Reels to compete against TikTok. But the platform hasn't necessarily damaged the competition.

Even with TikTok possibly being banned in the U.S., it remains extremely popular. And Snap just reported a stunning surge in revenue for the second quarter that saw it earn adjusted profits of $56 million compared to a year-ago loss.

More recently, though, Facebook created a controversy by limiting the distribution on its platform of an article critical of former vice president Joe Biden, although the story had not broken any of its rules, leading to complaints about bias.

The Journal says an antitrust lawsuit could be filed by year's end.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Facebook. The Motley Fool has a disclosure policy.

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