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Israel said seeking to fine Facebook hundreds of millions over merger laws

Competition Authority reportedly contends that social media giant failed to adequately report acquisitions of Israeli companies, days after the US filed suit against Facebook

Adi Soffer Teeni, general manager of Facebook Israel, speaks at the annual "Globes Business Conference" held at the David Intercontinental Hotel in Tel Aviv on December 6, 2015. (Miriam Alster/Flash90)
Adi Soffer Teeni, general manager of Facebook Israel, speaks at the annual "Globes Business Conference" held at the David Intercontinental Hotel in Tel Aviv on December 6, 2015. (Miriam Alster/Flash90)

Israel could reportedly impose a fine of hundreds of millions of shekels on Facebook for failing to adequately report a series of acquisitions it has made in the country.

The Israel Competition Authority is in contact with Facebook’s Israeli branch, the Globes business news website reported Sunday, and is probing  as well whether other tech giants like Google have also failed to fulfill their legal obligations when seeking regulatory approval for such mergers.

Foreign companies are required to report their acquisitions to Israeli authorities if they have previously purchased at least 25 percent of an Israeli company. They are exempt if it is their first such acquisition in the country.

They also must report to the Israel Competition Authority if they do business with another foreign firm that is similarly invested in Israeli companies, although that is more legally complex, Globes reported.

Facebook has acquired six Israeli startups and companies since 2011, including face recognition app Face.com and analytics company Onavo.

A demonstrator joins others outside Facebook CEO Mark Zuckerberg’s home in San Francisco to protest what they say is Facebook spreading disinformation, November 21, 2020. (AP Photo/Jeff Chiu, File)

The development came days after US federal regulators filed suit to force a breakup of Facebook, and 48 US states and districts accused the company in a separate lawsuit of abusing its market power in social networking to crush smaller competitors.

The landmark antitrust lawsuits, announced by the Federal Trade Commission and New York Attorney General Letitia James, mark the second major US government offensive this year against seemingly untouchable tech behemoths. The US Justice Department sued Google in October for abusing its dominance in online search and advertising — the government’s most significant attempt to buttress competition since its historic case against Microsoft two decades ago. Amazon and Apple also have been under investigation in the US Congress and by federal authorities for alleged anticompetitive conduct.

In the current case, the FTC specifically asked a court to force Facebook to sell off its Instagram and WhatsApp messaging services. James echoed that idea in more general terms, noting at a press conference that “it’s really critically important that we block this predatory acquisition of companies and that we restore confidence to the market.”

The FTC said Facebook has engaged in a “systematic strategy” to eliminate its competition, including by purchasing smaller up-and-coming rivals like Instagram in 2012 and WhatsApp in 2014. James echoed that in her press conference, saying Facebook “used its monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users.”

The FTC fined Facebook $5 billion in 2019 for privacy violations and instituted new oversight and restrictions on its business. The fine was the largest the agency has ever levied on a tech company, although it had no visible impact on Facebook’s business.

Facebook called the US government actions “revisionist history” that punishes successful businesses and noted that the FTC cleared the Instagram and WhatsApp acquisitions years ago. “The government now wants a do-over, sending a chilling warning to American business that no sale is ever final,” Facebook general counsel Jennifer Newstead said in a statement that echoed the company’s response to a recent congressional antitrust probe.

Facebook is the world’s biggest social network with 2.7 billion users and a market value of nearly $800 billion. CEO Mark Zuckerberg is the world’s fifth-richest individual and the most public face of Big Tech swagger.

AP contributed to this report.

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