Court Dismisses FTC, States Antitrust Suit Against Facebook

U.S. District Court for the District of Columbia judge James Boasberg dismissed antitrust lawsuits against social media giant Facebook brought by the Federal Trade Commission and 48 states. The judge said the states waited too long to bring up a case on deals made in 2012 and 2014 and that prosecutors failed to prove that Facebook holds a monopoly over social networking. The FTC can bring the case back in 30 days but the judge said it would require a lot more detail. Facebook’s stock rose 4.2 percent in the wake of the news.

The New York Times reports that former FTC chair William Kovacic said, “this really stings.” “This is a reminder to those who have wanted a dramatic, sweeping litigation campaign to take on Big Tech that there’s nothing easy about it, because the courts have a different view of the antitrust system,” he added.

New York attorney general Letitia James and FTC representatives were “reviewing the judge’s decision and considering their legal options.” The first task for newly appointed FTC chair Lina Khan — a leading critic of Big Tech — will be to “rewrite the Facebook lawsuit to address the judge’s criticisms.” The lawsuit contended that Facebook’s acquisitions of Instagram, for $1 billion in 2012, and WhatsApp, for $19 billion in 2014, “squashed competition in social networking.”

NYT notes that, “courts have narrowed interpretations of antitrust laws over the years, making government cases difficult to win” but the House Judiciary Committee just “advanced six bills that would overhaul antitrust laws, with the goal of loosening the influence that the big companies have over wide swaths of the economy.”

“Today’s development in the FTC’s case against Facebook shows that antitrust reform is urgently needed,” said representative Ken Buck (R-Colorado), a co-sponsor of the antitrust bills. “Congress needs to provide additional tools and resources to our antitrust enforcers to go after Big Tech companies engaging in anticompetitive conduct.”

CNBC reports the judge found that, “although the Court does not agree with all of Facebook’s contentions here, it ultimately concurs that the agency’s Complaint is legally insufficient and must therefore be dismissed … the FTC has failed to plead enough facts to plausibly establish a necessary element of all of its Section 2 claims — namely, that Facebook has monopoly power in the market for Personal Social Networking (PSN) Services.”

It continued, “the FTC’s Complaint says almost nothing concrete on the key question of how much power Facebook actually had, and still has, in a properly defined antitrust product market … It is almost as if the agency expects the Court to simply nod to the conventional wisdom that Facebook is a monopolist.”

But the court “also disagreed with Facebook’s argument that the FTC does not have the power to attack the acquisitions of Instagram and WhatsApp.” Instead, it ruled that, “the FTC can still seek divestiture of these acquisitions — but only if it succeeds in its legal arguments about Facebook’s monopoly power.”

Related:
Actually, the Antitrust Case Against Facebook Is Very Much Alive, Wired, 6/29/21