Antitrust Lawsuit: Court Sides With Facebook Over FTC

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The court dismissed FTC lawsuit against Facebook since the agency could not prove the platform's dominance in the market. (Image: pixabay / CC0 1.0)

A federal court in Washington D.C. has dismissed two antitrust cases filed against social media platform Facebook by the Federal Trade Commission (FTC) and a coalition of state attorneys general led by New York Democrat Letitia James. The lawsuits sought to break up Facebook monopoly in the social networking domain.

In his ruling on the FTC lawsuit, Judge James Boasberg, an Obama appointee, observed that the department’s lawyers had not provided enough evidence to support their claims against Facebook.

“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… The Complaint contains nothing on that score save the naked allegation that the company has had and still has a ‘dominant share of th[at] market (in excess of 60%)’,” Boasberg wrote.

The judge also said that the exact bounds of what constitutes social media are unclear and that the FTC’s inability to provide a proper metric or method to calculate Facebook’s market share makes its argument of the platform having a 60 percent-plus share “speculative.”

FTC said in a statement that they are closely reviewing the court’s opinion and assessing the “best option forward.” In its lawsuit, the agency argued that Facebook stifled competition by acquiring nascent competitors and called for breaking away Instagram and WhatsApp, which are owned by Facebook, from the company. The FTC now has until July 29 to file an amended complaint.

With regard to the lawsuit filed by the attorneys general, Boasberg stated that they had waited too long to file it and thus dismissed the case. The lawsuit had challenged Facebook buyout of Instagram in 2012 and WhatsApp in 2014. The plaintiffs had also argued that Facebook’s act of blocking interoperability for certain apps was in violation of Section 2 of the Sherman act.

“Although the Court does not agree with all of Defendant’s contentions here, it ultimately concurs with Facebook’s bottomline conclusion: none of the States’ claims may go forward,” Boasberg’s ruling stated.

Republican Representative Ken Buck argued in a tweet that the FTC case against Facebook only shows why antitrust reform is urgently needed. 

“Congress needs to provide additional tools and resources to our antitrust enforcers to go after Big Tech companies engaging in anticompetitive conduct,” he said.

House bills

The court ruling comes as two big tech antitrust bills have passed House committees and are now headed for a floor vote. The bills, Augmenting Compatibility and Competition by Enabling Service Switching (ACCESS) Act and the American Choice and Innovation Online Act, seek to protect businesses against discrimination from large technology companies.

H.R.3816, American Choice and Innovation Online Act, will prohibit Big Tech from engaging in behavior which “excludes or disadvantages the products, services, or lines of business of another business user relative to the covered platform operator’s own products, services, or lines of business.” This would mean that Google, which owns the video platform YouTube, cannot exclude other video streaming websites and apps from its search engine results or the Play Store. 

H.R.3849, ACCESS Act of 2021, mandates that big tech companies allow users to access their data in a structured, commonly used, and machine-readable format while also forcing them to keep their APIs open to competitors.

According to a report by The New York Times, tech companies are actively trying to suppress any bills aimed at curbing their powers. Lobbyists, paid groups, and the tech company executives themselves are targeting six bills that seek to undo the dominance of four Big Tech firms – Apple, Google, Facebook, and Amazon. 

“In a way I’ve never seen before, they [tech firms] are fighting tooth and nail… They consider these bills existential for them because they get at their business models,” Gigi Sohn, a distinguished fellow at Georgetown University’s Institute for Technology Law and Policy, told the media outlet.

International action

Meanwhile, Britain’s Competition and Markets Authority (CMA) and the European Commission are also investigating Facebook Marketplace to ascertain whether the platform is collecting and using data from advertisers to turn around and compete with the advertisers.

“We will look in detail at whether this data gives Facebook an undue competitive advantage in particular on the online classified ads sector, where people buy and sell goods every day, and where Facebook also competes with companies from which it collects data… In today’s digital economy, data should not be used in ways that distort competition,” European Competition Commissioner Margrethe Vestager said in a statement.

Andrea Coscelli, Chief Executive of CMA, stated that they would be working closely with the European Commission while investigating the matter. Facebook investigation is the third inquiry of a suspected break of competition law that the agency has opened in the digital markets. CMA is currently also investigating issues related to Apple’s AppStore and Google’s Privacy Sandbox.