FTC can proceed with Facebook lawsuit

TechnologyFTC can proceed with Facebook lawsuit


The Biden administration was given another chance to pursue legal action against Facebook over claims that the social network is a monopoly.

A federal judge rejected parent company Meta Platforms’ attempt to throw out the Federal Trade Commission’s antitrust complaint.

The ruling by US District Judge James Boasberg on Tuesday is a reversal of his decision last summer to dismiss the initial FTC action.

The agency was granted a request to file an amended complaint, which Boasberg on Tuesday called “more robust and detailed.”

“Second time lucky?” Boasberg wrote in his ruling. He said the initial FTC lawsuit “stumbled out of the starting blocks.”

The news doesn’t appear to have affected the company in the eyes of investors. Shares of Meta Platforms rose by nearly 2% in trading on Wall Street on Tuesday.

In Tuesday’s ruling, Boasberg acknowledged that the FTC complaint could “plausibly establish” that Facebook’s acquisitions of Instagram and WhatsApp constituted “anti-competitive conduct.”

Facebook sought to have Boasberg throw out the complaint just as he did last summer, saying that it had “no valid factual basis.”

The ruling is a victory for the Federal Trade Commission and its commissioner, Lina Khan, who has vowed to rein in Big Tech.
POOL/AFP via Getty Images

The amended complaint seeks to define what is meant by “personal social media.”

The FTC argued that Facebook’s sphere of competition is separate from online platforms like YouTube or TikTok, which users do not primarily use to communicate with friends and family.

While the amended complaint was an improvement over the initial lawsuit, Boasberg, who was appointed to the federal bench by former President Barack Obama, said the FTC faces a daunting task – proving that Facebook is indeed a monopoly.

“Although the agency may well face a tall task down the road in proving its allegations, the Court believes that it has now cleared the pleading bar and may proceed to discovery,” Boasberg wrote.

A spokesperson for Meta told the Post: “Today’s decision narrows the scope of the FTC’s case by rejecting claims about our platform policies.

“It also acknowledges that the agency faces a ‘tall task’ proving its case regarding two acquisitions it cleared years ago.”

The spokesperson added: “We’re confident the evidence will reveal the fundamental weakness of the claims.

“Our investments in Instagram and WhatsApp transformed them into what they are today. They have been good for competition, and good for the people and businesses that choose to use our products.”

But the agency tasked with protecting consumers doesn’t see it that way.

“Facebook holds monopoly power in the provision of personal social networking in the United States and has held such power continuously since at least 2011,” the FTC wrote in its amended complaint.

Facebook CEO Mark Zuckerberg testifies via video conference during an Antitrust, Commercial and Administrative Law Subcommittee hearing on "Online platforms and market power. Examining the dominance of Amazon, Facebook, Google and Apple" on Capitol Hill on July 29, 2020 in Washington, DC.
Facebook has slammed the FTC’s “meritless” allegations that it has engaged in anti-competitive practices.
Getty Images

In the amended complaint, the FTC retained its core argument that Facebook engaged in a “buy or bury” scheme to eliminate competition including Instagram and WhatsApp, helping the firm secure an illegal monopoly that hurts consumers.

“Unable to maintain its monopoly or its advertising profits by fairly competing, Facebook’s executives addressed this existential threat by buying up the new mobile innovators, including its rival Instagram in 2012 and mobile messaging app WhatsApp in 2014, who had succeeded where Facebook had failed,” the FTC alleged.

Boasberg also rejected Facebook’s contention that the FTC’s vote to file the amended complaint is invalid due to Chair Lina Khan’s past statements critical of Big Tech.

The company demanded that Khan recuse herself from weighing in on matters related to Facebook due to an alleged inherent bias.

But Boasberg disagreed, writing: “The Court believes that such contention misses its target, as Khan was acting in a prosecutorial capacity, as opposed to in a judicial role, in connection with the vote.”

The judge added: “Ultimately, whether the FTC will be able to prove its case and prevail at summary judgment and trial is anyone’s guess.”

“The Court declines to engage in such speculation and simply concludes that at this motion-to-dismiss stage, where the FTC’s allegations are treated as true, the agency has stated a plausible claim for relief under Section 2 of the Sherman Act.”



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