An investigation into Facebook Inc. by the US Federal Trade Commission (FTC) provided the company’s competitors with an opportunity to complain to the regulator about the tough tactics they used to limit competition, The Wall Street Journal writes.
The lawyers of Snap Inc., the owner of the Snapchat app, have been collecting files for several years, dubbed Project Voldemort, named after the protagonist of Harry Potter books. The materials relate to how Facebook hindered startup development.
In particular, the dossier contains information that the company took measures to limit the mention of Snap to owners of popular Instagram accounts, WSJ sources said. In addition, Snap executives suspect Instagram has blocked trending content created by Snapchat.
Over the past few months, FTC representatives have spoken with dozens of top managers of technology companies and application developers, sources say. They also talk with startup leaders who quit after losing access to the Facebook platform, and with founders of startups that sold their Facebook business.
Regulators are trying to get information on Facebook tactics, which allowed it to turn from a social network for students into a global social network, which every fourth person in the world currently uses daily, the newspaper writes.
The FTC’s actions show that the regulator is “trying to put together data on what a behavior model could be to prevent competition with Facebook’s core business,” said Genée Kimmelman, senior adviser to the technology sector-focused consumer group Public Knowledge.
A WSJ source notes that top managers at Facebook itself fear the disclosure by its competitors of company-defamatory information and are discussing ways to improve relations with Silicon Valley companies.
Facebook Investigation Directions
One of the main areas of the FTC investigation is the purchase of Facebook by Onavo, an Israeli startup, in 2013, the application of which allowed the social network, in particular, to monitor which applications its customers use most often and for the longest.
Snap was founded in 2011, when Facebook was already a leader among social networks, but the Snapchat application quickly gained popularity among the youngest category of users. At one point, Facebook using Onavo was able to keep track of how many messages each Snapchat user sends and how much time he uses one or another application feature, former Facebook employees said. At the same time, Facebook did not have access to the content of messages or photos posted on Snapchat. Later, Snap encrypted the application’s traffic, and the availability of its content declined sharply.
Another area of the investigation is evidence that the founder and head of Facebook, Mark Zuckerberg, bought or tried to buy startups, which, in his opinion, could become competitors to his social network. For example, Zuckerberg, meeting with startup founders, including Snap CEO Evan Spiegel and co-founder of Foursquare Inc. Dennis Crowley, offered them two scenarios for the development of the situation: either they sell their business for the proposed price, or Facebook copies their products, thus complicating their development, sources say.
Both Snap and Foursquare chapters rejected Facebook’s offer to buy, and in both cases, soon after their rejection, Facebook introduced features that copied their products in its applications.
The FTC investigation is one of several antitrust audits against Facebook and other large technology companies in the US and other countries around the world.
Earlier this month, the Law Committee of the House of Representatives of the American Congress asked Facebook for information on the communications of top managers regarding the decision to purchase Instagram in 2012 and the WhatsApp messenger in 2014.
Via | WSJ