Lengthy, pricey highway forward for FTC antitrust case towards Meta
The government’s antitrust case against Facebook and Instagram owner Meta may be difficult to prove in court, be expensive to fight and take years to finish. But even if Meta wins in court, it could still lose in Congress.
The Federal Trade Commission and lawmakers are grappling with how to curb the size and influence of Meta. The FTC’s lawsuit may force the company to break up and sell acquisitions like Instagram and WhatsApp. Meanwhile, lawmakers are considering antitrust bills that would also break up the company, and reforming legislation to end certain legal protections for social media firms.
However, the FTC’s antitrust case has been fraught with challenges. US District Judge James Boasberg dismissed his initial suit along with a similar suit against Meta by a group of state attorneys general last year. The FTC was allowed to refile its suit, while the state attorneys general were not.
Experts don’t believe the FTC’s antitrust case is impossible but see a years-long battle between a resource-strapped federal enforcement agency and a multi-billion-dollar tech company with top-notch antitrust lawyers.
“It’s not an open-and-shut case,” said George Hay, an antitrust law expert and professor at Cornell Law School. “We know Facebook is big, but it’s less clear what they did that’s unlawful to get big and to keep big.”
Making the case: Meta’s ‘killer acquisitions’
The FTC filed a lawsuit against Facebook, now Meta, in December 2020 alleging it achieved dominance in the social media market through a “years-long course of anticompetitive conduct.”
The FTC specifically targeted its 2012 Instagram acquisition, as well as its 2014 WhatsApp acquisition, alleging Facebook bought the companies knowing they could turn into potential rivals, describing the acquisitions as “killer acquisitions.”
It’s not an open and shut case. We know Facebook is big, but it’s less clear what they did that’s unlawful to get big and to keep big.
George HayAntitrust expert, Cornell University
Hay said the FTC’s claim will face problems in court. “The argument that but for the acquisitions Facebook’s dominance would’ve come tumbling down, is a big stretch,” he said.
Impact of the state attorneys general case
In its lawsuit, the FTC also alleged the company imposed anti-competitive conditions on third-party software developers designed to hamper their growth and ability to become competitors to Facebook.
But Boasberg halted the FTC’s ability to proceed with the third-party argument in his January decision, cutting the FTC’s case in half.
Should the case be reinstated by state attorneys general, however, it could have a direct effect on the FTC’s case, said Randy Stutz, vice president of legal advocacy at the American Antitrust Institute.
In its initial lawsuit against Meta, the FTC framed Meta’s anticompetitive conduct as a strategy that included not only the killer acquisitions but pulling a “bait and switch” on developers, Stutz said. After promising developers an open playing field and welcoming them in, the FTC claims the company closed off the network to firms that competed with Facebook’s core functionality.
When Boasberg narrowed the FTC’s case by eliminating the third-party developer claim, noting in the decision that Facebook “abandoned the policies in 2018,” it hurt the agency’s discovery ability to support its anticompetitive claims, Stutz said.
Since the states’ case made the same allegations, if it should be reinstated then the FTC could also file a motion to reconsider Boasberg’s recent ruling that narrowed their case, Stutz said.
Summary judgment and trial
Over the next one to two years, Cornell’s Hay said he expects a period of discovery and depositions before Meta makes a motion for summary judgment.
A summary judgment is made by a judge based on evidence collected without proceeding with a full trial. Hay said many antitrust cases get tossed out at the summary judgment stage. If the case does go to full trial, it could take six to seven years to conclude, he said.
Hay said the likelihood of a settlement early on is low.
“I don’t see any real motivation for Facebook to try and get rid of this,” he said. “They have the resources to put into it; the FTC has limited resources. I think they’re going to throw everything at the FTC and keep going until almost the very end.”
According to Boasberg’s January 2022 decision allowing the FTC’s case to go forward, “ultimately, whether the FTC will be able to prove its case and prevail at summary judgment and trial is anyone’s guess.”
Breaking up meta
Should the FTC’s case against Meta prevail in the end, the agency wants Meta to sell Instagram and WhatsApp as a possible remedy.
However, Hay said antitrust cases resulting in company breakups are rare. Even in monopolization cases, the remedy is most often halting the behavior that led to the company’s dominance. Hay said in the Microsoft antitrust case in the 1990s, for example, the company wasn’t broken up but told to stop bundling its browser and operating system.
Time may be on Meta’s side, he said.
“To say you acquired something 10 years ago, now the remedy is you have to get rid of it, is a real challenge,” Hay said.
Where Congress stands
Antitrust legislation proposed in Congress also seeks to break up tech companies including Meta, Amazon and Google.
Though the proposed antitrust bills and the FTC lawsuit take aim at tech giants’ size and business operations, experts like Hay believe that most of the concerns about Meta have more to do with privacy and misinformation and can be handled through legislation such as a federal data Privacy law or Section 230 reform. Section 230 is the law that protects social media companies from liability for information posted on the platforms by third parties.
However, both sides of the aisle in Congress are deeply divided over Section 230 reform as well as a federal data privacy law and have yet to move forward on either.
Makenzie Holland is a news writer covering big tech and federal regulation. Prior to joining TechTarget, she was a general reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.