NEW YORK — State Attorney General Letitia James on Wednesday announced a multi-state lawsuit against Facebook, alleging the company acts in a predatory manner to defeat its competitors and monetizes data on its customers.
Forty-seven other state attorneys general and the District of Columbia joined James in the suit.
“For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users,” James said.
The company uses its money and data collected on its users to squash its competitors, James said.
“They have reduced choices for consumers, stifled innovation and degraded privacy protections for millions of Americans,” James said.
Facebook purchased smaller rivals to protect its dominant market share, including Instagram and What’s App.
“Billions were thrown at smaller companies in order to get them to sell,” James said.
Instagram was purchased for $1 billion in 2012 and What’s App was purchased in 2014 for $19 billion — a much higher cost than industry analysts valued it at.
The company tried to thwart smaller companies that refused to sell, James said.
Facebook also allowed third-party developers to create apps, or applications, on its site, increasing the number of Facebook users, and then cut off apps it viewed as a threat. The practice squashed potential competitors, James alleged.
User data was collected and used to sell billions of dollars worth of advertising, the suit alleges.
The company’s practices deprived users of the services of competitors, stifled innovation and reduced privacy protections, James said.
“Today, we are taking action to stand up for the millions of consumers and many small businesses that have been harmed by Facebook’s illegal behavior,” James said. “Instead of competing on the merits, Facebook used its power to suppress competition so it could take advantage of users and make billions by converting personal data into a cash cow.”
More than half of American adults log on to Facebook daily, James said.
“While consumers have been spending their time keeping in touch on Facebook, Facebook has been spending its time surveilling users’ personal information and profiting from it,” James said. “No company should have this much unchecked power over our personal information and our social interactions.”
The suit asks the court to halt the company’s anti-competitive behavior and prevent Facebook from doing so in the future, and provide any relief the court deems appropriate, James said.