Fb has reportedly supplied to assist construct a brand new social community to stop antitrust lawsuits


Mark Zuckerberg, Facebook Co-Founder, Chairman and CEO, testifies before the House Energy and Commerce Committee at the Rayburn House office building on Capitol Hill on April 11, 2018 in Washington, DC.

Yasin Ozturk | Anadolu Agency | Getty Images

Before federal and state investigators filed sweeping antitrust lawsuits against Facebook in federal court earlier this month, the company's top lawyers reportedly expanded an olive branch to show it could boost competition.

Facebook attorneys told state and state investigators that they could help a new social network by licensing their own code and users' relationship networks to another company, the Washington Post reported Tuesday.

Investigators ultimately declined to attack Facebook on the proposal, the Post reported, but the offer shows both what Facebook was and wasn't willing to give up in order to get out of the lawsuits. Facebook has denied allegations of anti-competitive behavior.

A portion of the state and federal lawsuits focus on the concept of network effects, which describes how an industry network can get more and more "sticky" to users as it gets larger. For example, if most of a user's friends and family have joined a single social network, that user will have less incentive to move to a new platform with fewer users, even if it has some more desirable features.

The offer reported by Facebook may not fully take this effect into account. As a result of the lawsuits, regulators believe that Facebook's stamina is based not only on its technology, but also on its already well-established place in many people's lives.

Facebook did not comment on CNBC, but a spokesman for the Post told the Post in a statement, "We will vigorously defend the ability of people and businesses to continue to defend our free services, advertisements and apps because of the value they bring."

An FTC spokesman declined to comment, and a representative for New York Attorney General Letitia James, who leads the states' efforts against Facebook, did not respond immediately.

Read the full story in the Washington Post.

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Steven Gregory