Tuesday, October 19, 2021

Facebook must sell Instagram, WhatsApp after U.S. government steps in

Shares of social media giant Facebook fell on Tuesday after the U.S. government said it should sell its two biggest photo-sharing apps, Instagram and WhatsApp.

The Economic Espionage Act will be used to have Twitter and Facebook sell their photo-sharing apps to a private owner that has no data sharing agreements with any foreign entities, according to a filing filed with the U.S. District Court for the Northern District of California.

The government first unveiled the tactic in its own filing in 2015. It was not originally mentioned in the papers filed Monday.

The government did not require that Facebook sell either app outright. Rather, it said the government will remove these apps from the “Worldwide Cease and Desist List” so they are no longer subject to injunction. The DOJ also said that if Facebook is not able to resolve the dispute before September 9, 2020, Facebook may need to sell Instagram and WhatsApp.

In 2015, Facebook agreed to sell WhatsApp to a Facebook investor at $19 billion — a deal that eventually unraveled.

According to the Securities and Exchange Commission, Mark Zuckerberg is personally responsible for the Instagram and WhatsApp assets on the world’s largest social network, which filed for its initial public offering in 2012.

Facebook declined to comment on the government’s move and did not immediately respond to the requests for comment.

The company only acquired Instagram in 2012 for $1 billion and WhatsApp in 2014 for $22 billion.

Facebook has always contended that both Instagram and WhatsApp are separate entities and that the apps do not share data with other Facebook properties such as the social network, messenger, and even the news feed.

But that hasn’t stopped the Federal Trade Commission, the Office of the Director of National Intelligence and the US government from filing complaints related to the privacy policies, government access to user data and anti-trust violations.

Facebook came under fire last week after The New York Times reported that the company and regulators were investigating the company over its data sharing deals with the government. Facebook said in a statement on Saturday that “no data of Facebook users or businesses has ever been shared with the National Security Agency (NSA).”

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