Facebook offered to license its network and code to avoid antitrust action
December 22, 2020
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In the wake of the groundbreaking Federal Trade Commission lawsuit against Facebook, The Washington Post is reporting new details of the company’s negotiations with regulators in the run-up to the case, including an unusual offer to license its code and network to competitors.

According to the Post’s reporting, Facebook was willing to significantly alter its business practices in order to avoid litigation, including one measure “allow[ing] another firm or developer to license access to its powerful code — and its users’ intricate web of relationships — so that they could more easily create their own version of a social network.”

Ultimately, the FTC declined Facebook’s offer, filing an antitrust complaint against the company on December 9th. The lawsuit alleges that Facebook used its platform power to stifle competitors, and it seeks to unwind the acquisitions of WhatsApp and Instagram.

It’s not clear what a platform-licensing arrangement would look like in practice, but it’s a tantalizing proposition for some tech reformers, particularly thinkers like Harold Feld and Tim Wu who have looked for ways to make it easier for users to switch platforms. This kind of licensing deal would allow upstarts like TikTok to buy access to many of Facebook’s most powerful tools — but it’s unclear whether it would produce meaningful competition for the company.

Facebook is also facing new scrutiny over an alleged deal with Google to coordinate ad networks. A new report from The Wall Street Journal on Monday night expanded on details of an ad network arrangement between the two companies, as detailed in a case brought against Google by the Texas attorney general. According to the complaint, the arrangement guaranteed Facebook would win a particular percentage of bids on the company’s auction site, potentially constituting collusion between the two companies.

According to the Journal’s reporting, the deal was explicitly promoted by Facebook COO Sheryl Sandberg who told CEO Mark Zuckerberg the arrangement was “a big deal strategically.” Facebook executives were also given detailed and explicit instructions on how to avoid antitrust infractions.

Both companies deny the allegation, although much of the state’s evidence has yet to be presented. “AG Paxton’s ad tech claims are inaccurate,” a Google representative told The Verge. “We don’t manipulate the auction and Facebook’s participation in Open Bidding doesn’t prevent the company from participating in header bidding or any other similar auction.”

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