Before federal and state investigators filed sweeping antitrust claims against Facebook in federal court this month, the company’s top lawyers reportedly extended an olive branch to show that it could foster competition.
Facebook’s lawyers told state and federal investigators it could help a new social network get off the ground by licensing its own code and users’ webs of relationships to another firm, The Washington Post reported Tuesday.
Investigators ultimately declined to take Facebook up on the suggestion, the Post reported, but the offer illustrates both what Facebook was willing to give up to get out of the lawsuits and what it was not. Facebook has denied claims of anticompetitive behavior.
Part of the state and federal lawsuits focus on the concept of network effects, which describes how a network can become, in industry terms, increasingly “sticky” for users the larger it gets. For example, once most of a users’ friends and family have joined a single social network, that user has less incentive to switch to a new platform with fewer users, even if it has some more desirable features.
Facebook’s reported offer may not have fully account for this effect. Based on the lawsuits, regulators believe that Facebook’s staying power is based not only on its technology, but also its already-entrenched standing in many people’s lives.
Facebook did not provide a comment to CNBC but a spokesperson told the Post in a statement, “We will continue to vigorously defend the ability of people and businesses to choose our free services, advertising, and apps because of the value they bring.”
A spokesperson for the FTC declined to comment and a representative for New York Attorney General Letitia James, who is leading the states’ effort against Facebook, did not immediately respond.
Read the full story at The Washington Post.
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