Court dismisses FTC, state antitrust cases against Facebook

A D.C. federal court on Monday dismissed two antitrust cases brought against Facebook last year in a major setback for federal and state regulators.

The Federal Trade Commission (FTC) will have an opportunity to file an amended complaint, but the challenge from a coalition of state attorneys general led by New York’s Letitia James (D) has been dismissed entirely.

“The FTC is closely reviewing the opinion and assessing the best option forward,” an FTC spokesperson said in a statement. 

The regulatory agency had argued that Facebook stifled competition by acquiring nascent competitors. The case called for the unwinding of WhatsApp and Instagram.

Judge James E. Boasberg, an Obama-era nominee, dismissed the FTC’s complaint as presented, but not the argument that Facebook may have a monopoly on “personal social networking.” He said the regulatory agency provided insufficient evidence to prove that Facebook controls over 60 percent of the market — as the case alleges — but that conceivably it could do so.
“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 ruling reads.
The FTC has until July 29 to file an amended complaint.

The court also determined Monday that the state AG case was filed too late. The lawsuit, filed last year, had challenged Facebook’s acquisitions of WhatsApp and Instagram, which were completed in 2014 and 2012 respectively. 

The state officials’ argument that Facebook blocking interoperability for certain apps violated Section 2 of the Sherman Act was similarly dismissed because the actions took place more than five years ago.

“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,” the decision reads.

A spokesperson for James’ office told The Hill they are “reviewing this decision and considering our legal options.” The states could challenge the dismissal.

A Facebook spokesperson said the company was “pleased” by Monday’s rulings.

“We compete fairly every day to earn people’s time and attention and will continue to deliver great products for the people and businesses that use our services,” they added in a statement.

The social media giant hit a market cap of $1 trillion for the first time Monday shortly after the rulings.

Monday’s decision is likely to add fuel to efforts to reform antitrust law. Some lawmakers have criticized existing statutes, especially the focus on consumer welfare in current rules, as overly narrow.

The House Judiciary Committee voted last week to advance six bills aimed at giving more resources and authority to regulators as well as expanding the kind of behavior that is considered anti-competitive. 

“Today’s development in the FTC’s case against Facebook shows that antitrust reform is urgently needed,” Rep. Ken Buck (R-Colo), ranking member on the committee’s antitrust panel, tweeted.

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

Updated at 5:25 p.m.

Tags antitrust Facebook Ken Buck Lawsuit Social media tech

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