- The Federal Trade Commission filed a lawsuit against Facebook on Wednesday, alleging antitrust violations and asking a federal court to force the company to sell off assets such as Instagram and WhatsApp.
- The same day, attorneys general for 48 other states also filed another lawsuit against the $1 trillion company. The suit accused Facebook of implementing a “buy-or-bury” strategy meant to target and snuff out competition in the industry.
- These lawsuits represent the most significant legal and political challenge to Facebook’s exponential growth in the company’s history.
- On Thursday, German regulators also launched an antitrust investigation into Facebook’s decision to link Oculus VR products to its social network.
FTC Sues Facebook for Antitrust Violations
Facebook faces two antitrust lawsuits filed in federal court on Wednesday as well as a separate antitrust investigation launched in Germany on Thursday, making it a tough week for the tech giant.
The first of those lawsuits was brought by the Federal Trade Commission, which accused Facebook of engaging in illegal tactics meant to suppress its competition in the social media industry.
“Facebook has maintained its monopoly position by buying up companies that present competitive threats and by imposing restrictive policies that unjustifiably hinder actual or potential rivals that Facebook does not or cannot acquire,” the FTC said on the opening page of its lawsuit.
Specifically, the FTC referenced two social media platforms: Instagram, which Facebook bought in 2012 for $1 billion, and WhatsApp, which it bought for $19 billion two years later.
The FTC is asking a federal court in the D.C. Circuit to force Facebook to sell-off both Instagram and WhatsApp so that they can once again become independent businesses.
The lawsuit cites 2012 comments from CEO Mark Zuckerberg where he said Instagram threatened to leave Facebook “very behind in both functionality and brand.”
It also noted that Zuckerberg once called WhatsApp “the next biggest consumer risk” to Facebook.
Besides Instagram and WhatsApp, the lawsuit also mentions the now-defunct video-sharing app Vine. Notably, Vine led to the rise of creators who have now become household names, including Jake and Logan Paul, Lele Pons, Liza Koshy, and David Dobrik. It was also the starting point for more traditional celebrities like Shawn Mendes.
When Vine first came out in 2013, users were able to find friends on the app using connectivity to Facebook; however, Zuckerberg later approved a move to cut off the functionality. Because of that, the FTC lawsuit argues Vine was stripped of a feature that would have helped it’s ability to grow.
48 States File Second Antitrust Lawsuit
Alongside that lawsuit, another antitrust lawsuit against Facebook was filed by attorneys general in 48 states Wednesday.
While announcing that lawsuit, New York Attorney General Letitia James said Facebook’s practices have “squeezed oxygen” from the tech industry.
“Today, we are sending a clear and strong message to Facebook and every other company that any efforts to stifle competition, hurt small business, reduce innovation and creativity, [and] cut privacy protections will be met with the full force of our offices,” James added.
The lawsuit itself denounces Facebook’s “bury-or-buy strategy,” which forces users who are “otherwise dissatisfied with the data usage and privacy options available on Facebook” to “have nowhere else to go.”
Unlike the FTC lawsuit, this lawsuit doesn’t explicitly call for Facebook to be broken up; rather, the attorneys general are asking the D.C. court to stop Facebook’s anticompetitive conduct in general, while asking the court to take any other action it views as necessary.
Facebook: Lawsuits Are “Revisionist History”
Facebook Vice President and General Counsel Jennifer Newstead has criticized the lawsuits as “revisionist history.”
She noted that at the time Facebook bought Instagram and WhatsApp, the FTC approved both acquisitions.
“The government now wants a do-over, sending a chilling warning to American business that no sale is ever final,” she said. “Antitrust laws exist to protect consumers and promote innovation, not to punish successful businesses.”
“People and small businesses don’t choose to use Facebook’s free services and advertising because they have to, they use them because our apps and services deliver the most value.”
As legal experts have pointed out, the government is well within its rights to pursue these lawsuits.
For one, Newstead’s “revisionist history” lacks context.
When the FTC originally approved Facebook’s acquisition of WhatApp, it did so with the promise that Facebook would preserve WhatsApp’s independence and privacy protections; however, over the last year, Facebook has been working to integrate WhatsApp and Instagram with Facebook Messenger. As a result, regulators have described the plan as a bait-and-switch tactic that has the potential to eliminate WhatsApp’s privacy protections, after having also eliminated it as a competitor.
On top of that, Zuckerberg has appeared before Congress multiple times this year alone because of antitrust concerns.
In October, House Democrats also unveiled a 450-page antitrust report against Facebook, as well as Google, Amazon, and Apple.
“Our investigation leaves no doubt that there is a clear and compelling need for Congress and the antitrust enforcement agencies to take action that restores competition, improves innovation, and safeguards our democracy,” lawmakers noted.
Wednesday’s lawsuits are undoubtedly meant to be a step in that direction. In fact, they represent the most significant legal and political challenge to Facebook’s exponential growth in the company’s history.
Still, a resolution on this issue could take years. Reportedly, Zuckerberg himself even noted that in an internal discussion with employees, telling them that he didn’t yet anticipate “any impact on individual teams or roles.”
Germany Launches Investigation into Facebook VR
On Thursday, German regulators announced they were launching an investigation into Facebook’s decision to require people to create Facebook accounts in order to be able to use their Oculus virtual reality products.
“Linking virtual reality products and the group’s social network in this way could constitute a prohibited abuse of dominance by Facebook,” investigators said.
The lawsuits and this investigation are the latest in governmental moves around the world to regulate big tech industries.
Last month, the European Union filed its own antitrust charges against Amazon, accusing it of using its access to data from companies that sell products on its platform to gain an unfair advantage over them.
In October, the United States Justice Department and 11 states sued Google and accused it of cornering the market in search-related advertising.
See what others are saying: (NBC News) (Reuters) (The Washington Post)
Hackers Hit Twitch Again, This Time Replacing Backgrounds With Image of Jeff Bezos
The hack appears to be a form of trolling, though it’s possible that the infiltrators were able to uncover a security flaw while reviewing Twitch’s newly-leaked source code.
Hackers targeted Twitch for a second time this week, but rather than leaking sensitive information, the infiltrators chose to deface the platform on Friday by swapping multiple background images with a photo of former Amazon CEO Jeff Bezos.
According to those who saw the replaced images firsthand, the hack appears to have mostly — and possibly only — affected game directory headers. Though the incident appears to be nothing more than a surface-level prank, as Amazon owns Twitch, it could potentially signal greater security flaws.
For example, it’s possible the hackers could have used leaked internal security data from earlier this week to discover a network vulnerability and sneak into the platform.
The latest jab at the platforms came after Twitch assured its users it has seen “no indication” that their login credentials were stolen during the first hack. Still, concerns have remained regarding the potential for others to now spot cracks in Twitch’s security systems.
It’s also possible the Bezos hack resulted from what’s known as “cache poisoning,” which, in this case, would refer to a more limited form of hacking that allowed the infiltrators to manipulate similar images all at once. If true, the hackers likely would not have been able to access Twitch’s back end.
The photo changes only lasted several hours before being returned to their previous conditions.
First Twitch Hack
Despite suspicions and concerns, it’s unclear whether the Bezos hack is related to the major leak of Twitch’s internal data that was posted to 4chan on Wednesday.
That leak exposed Twitch’s full source code — including its security tools — as well as data on how much Twitch has individually paid every single streamer on the platform since August 2019.
It also revealed Amazon’s at least partially developed plans for a cloud-based gaming library, codenamed Vapor, which would directly compete with the massively popular library known as Steam.
Even though Twitch has said its login credentials appear to be secure, it announced Thursday that it has reset all stream keys “out of an abundance of caution.” Users are still being urged to change their passwords and update or implement two-factor authentication if they haven’t already.
Twitch Blames Server Configuration Error for Hack, Says There’s No Indication That Login Info Leaked
The platform also said full credit card numbers were not reaped by hackers, as that data is stored externally.
Login and Credit Card Info Secure
Twitch released a security update late Wednesday claiming it had seen “no indication” that users’ login credentials were stolen by hackers who leaked the entire platform’s source code earlier in the day.
“Full credit card numbers are not stored by Twitch, so full credit card numbers were not exposed,” the company added in its announcement.
The leaked data, uploaded to 4chan, includes code related to the platform’s security tools, as well as exact totals of how much it has individually paid every single streamer on the platform since August 2019.
Early Thursday, Twitch also announced that it has now reset all stream keys “out of an abundance of caution.” Streamers looking for their new keys can visit a dashboard set up by the platform, though users may need to manually update their software with the new key before being able to stream again depending on what kind of software they use.
As far as what led to the hackers being able to steal the data, Twitch blamed an error in a “server configuration change that was subsequently accessed by a malicious third party,” confirming that the leak was not the work of a current employee who used internal tools.
Will Users Go to Other Streaming Platforms?
While no major creators have said they are leaving Twitch for a different streaming platform because of the hack, many small users have either announced their intention to leave Twitch or have said they are considering such a move.
It’s unclear if the leak, coupled with other ongoing Twitch controversies, will ultimately lead to a significant user exodus, but there’s little doubt that other platforms are ready and willing to leverage this hack in the hopes of attracting new users.
At least one big-name streamer has already done as much, even if largely only presenting the idea as a playful jab rather than with serious intention.
“Pretty crazy day today,” YouTube’s Valkyrae said on a stream Wednesday while referencing a tweet she wrote earlier the day.
“YouTube is looking to sign more streamers,” that tweet reads.
“I mean, they are! … No shade to Twitch… Ah! Well…” Valkyrae said on stream before interrupting herself to note that she was not being paid by YouTube to make her comments.
The Entirety of Twitch Has Been Leaked Online, Including How Much Top Creators Earn
The data dump, which could be useful for some of Twitch’s biggest competitors, could signify one of the most encompassing platform leaks ever.
Massive Collection of Data Leaked
Twitch’s full source code was uploaded to 4chan Wednesday morning after it was obtained by hackers.
Among the 125 GB of stolen data is information revealing that Amazon, which owns Twitch, has at least partially developed plans for a cloud-based gaming library. That library, codenamed Vapor, would directly compete with the massively popular library known as Steam.
With Amazon being the all-encompassing giant that it is, it’s not too surprising that it would try to develop a Steam rival, but it’s eyecatching news nonetheless considering how much the release of Vapor could shake up the market.
The leaked data also showcased exactly how much Twitch has paid its creators, including the platform’s top accounts, such as the group CriticalRole, as well as steamers xQcOW, Tfue, Ludwig, Moistcr1tikal, Shroud, HasanAbi, Sykkuno, Pokimane, Ninja, and Amouranth.
These figures only represent payouts directly from Twitch. Each creator mentioned has made additional money through donations, sponsorships, and other off-platform ventures. Sill, the information could be massively useful for competitors like YouTube Gaming, which is shelling out big bucks to ink deals with creators.
Data related to Twitch’s internal security tools, as well as code related to software development kits and its use of Amazon Web Services, was also released with the hack. In fact, so much data was made public that it could constitute one of the most encompassing platform dumps ever.
Streamer CDawgVA, who has just under 500,000 subscribers on Twitch, tweeted about the severity of the data breach on Wednesday.
“I feel like calling what Twitch just experienced as “leak” is similar to me shitting myself in public and trying to call it a minor inconvenience,” he wrote. “It really doesn’t do the situation justice.”
Despite that, many of the platform’s top streamers have been quite casual about the situation.
“Hey, @twitch EXPLAIN?”xQc tweeted. Amouranth replied with a laughing emoji and the text, “This is our version of the Pandora papers.”
Meanwhile, Pokimane tweeted, “at least people can’t over-exaggerate me ‘making millions a month off my viewers’ anymore.”
Others, such as Moistcr1tikal and HasanAbi argued that their Twitch earning are already public information given that they can be easily determined with simple calculations.
Could More Data Come Out?
This may not be the end of the leak, which was labeled as “part one.” If true, there’s no reason to think that the leakers wouldn’t publish a part two.
For example, they don’t seem to be too fond of Twitch and said they hope this data dump “foster[s] more disruption and competition in the online video streaming space.”
They added that the platform is a “disgusting toxic cesspool” and included the hashtag #DoBetterTwitch, which has been used in recent weeks to drive boycotts against the platform as smaller creators protest the ease at which trolls can use bots to spam their chats with racist, sexist, and homophobic messages.
Still, this leak does appear to lack one notable set of data: password and address information of Twitch users.
That doesn’t necessarily mean the leakers don’t have it. It could just mean they are only currently interested in sharing Twitch’s big secrets.
Regardless, Twitch users and creators are being strongly urged to change their passwords as soon as possible and enable two-factor authentication.