Introduction
Facebook is in the news today after rejection of pleas against it by the US Federal court. The basic reason behind these complaints were that Facebook is trying to create monopoly in the market. This is because they imposed anti trust and anti competitive allegations on the company. After this news, there is a positive response in the share price of its shares by 4%. Now let us know about the reasons of this jump in share prices. Also this article will let you know about the imposed allegations on the company.
Rejection of both complaints by US court on Facebook
US Federal court has outrightly rejected 2 years complaints. Out of these, 1 complaint was filed by Federal Trade Commission and second jointly by many states. Court has clearly stated that there were no valid grounds of both of these complaints. This is because only the complaints were rejected by the court.
US Federal Court’s on Federal Trade Commission and another jointly by 45 other states
Above complaint rejected by the US Federal Court on many grounds. The complaints filed were almost unclear. This is because the base of their complaints was that Facebook is trying to reduce competition in the market and create a monopoly.
But even after 2 years, they were unable to justify strong and clear facts which can clear allegations imposed by them on Facebook. Also it agreed with the company’s viewpoint acquisitions was purely the move for innovation and growth.
Complaints by Federal Trade Commission and another jointly by 45 other states on Facebook
The Federal Trade Commission has filed a complaint against Facebook. The basis of their complaint was that Facebook is trying to demolish its competitors by buying them. Various facts were presented by them in support of their complaint. Instagram was one of Facebook’s competitors way back in 2012. In many statements, it was also considered by Facebook as its competitor. So with the point of view to cut off the competition, Facebook decided to buy it in 2012 for an amount of $1 billion.
Besides this, this similar incident happened again in the year 2014, when Whatsapp is rising as another competitor of Facebook. This app was also supposed to threaten facebook. Then also Facebook acquired Whatsapp for an amount of $19 billion. This was yet another big acquisition by Facebook after Instagram. So this has made Facebook, owners of its 2 big competitors Whatsapp and Instagram. Its reasons were considered that they can create competition for Facebook in future.
So on the basis of above 2 acquisitions, FTC contended and raised its complaint that it is trying to eliminate competition from the market. This is an anti-competitive move by the Facebook. Moreover they more justified their facts by saying that Facebook is trying to create a monopoly in the market by these acts. In their complaint, they also urged for a split of Whatsapp and Instagram from Facebook. This would be in the favor of the market.
Beside this, after this, another suit was also filed jointly by 45 states. These states have also raised the similar point as above suit. They also pointed out that its totally monopolistic move of the company. So it must be taken into concern to create a competitive market for all the business players.
Facebook’s reaction on above complaints
On above complaints, Facebook also put its statement. Its owner also pleaded to the US Judge that there are no solid reasons which clarifies the complaints filed by them. Also, it is completely nonsensical. Besides this, they said that increasing your business by acquisitions must not be considered as eliminating competition. Also, their acts of acquisition was not anti-competitive acts.
Besides above, its Vice president Will Castleberry said that if we work in a field of technology, there is a high need for innovation and creativity. This is because in its absence, we would not be able to attract more consumers and retain our existing consumers. Also technology market is very much dynamic and we need to update us to adjust with it. So these acquisitions were only for the sake of the innovation. This was not supposed to eliminate competition and trying to create monopoly in the market.
Impact of the decision on Shares prices of Facebook
This positive decision was indeed in favor of the company. It aroused much interest from investors in the company. Because of this news, its share price jumped by 4%. Besides this, this jump of shares made it possible for Facebook to enter the trillion club in terms of market capitalisation. This is because it is the first time for the company that it has crossed the market capitalization of above $ 1 trillion. It was indeed a positive sign for the company and the company is just hoping for more increase in its market capitalization.
Conclusion
Concluding my above article, I would just say that we must always consider 2 sides of the story like US court. This is because it would help us to take much better decision and on right points.