Fb hit by new US antitrust case as FTC seeks do-over | Enterprise

US antitrust authorities re-filed their monopoly lawsuit against Facebook Inc. to save the landmark case, which a judge dismissed in June.

The Federal Trade Commission filed the new lawsuit in federal court in Washington on Thursday, claiming that Facebook violated antitrust laws by buying Instagram and WhatsApp in order to shut them down as a competitor. The FTC is asking the court to resolve the acquisitions as in the previous lawsuit.

“After failing to compete with new innovators, Facebook illegally bought or buried them when their popularity became an existential threat,” Holly Vedova, acting director of the agency’s competition bureau, said in a statement. “This behavior is no less anti-competitive than if Facebook bribed aspiring app competitors not to compete.”

The agency is trying to revive the case after U.S. District Judge James Boasberg dismissed it in June. Boasberg had given the FTC 30 days to fix and re-submit the bug, and the commission was given an extension until August 19.

The FTC said the new complaint included details to support the agency’s claim that Facebook had dominant market share in the US personal social networking market and had the power to rule out competition. The FTC’s original complaint was 53 pages while the new 80 pages.

“It is unfortunate that, despite the court’s rejection of the lawsuit and the conclusion that there was no basis for a lawsuit, the FTC has decided to continue this unsubstantiated lawsuit,” Facebook said in a statement. “Our Instagram and WhatsApp acquisitions were reviewed and approved many years ago, and our platform policies were lawful.”

Facebook stock lost less than 1% in New York at 2:46 p.m., trading at $ 354.49. The stock is up around 30% this year.

The Facebook case, first filed in December, represents an early test of FTC chairman Lina Khan, who was appointed head of the agency by President Joe Biden in June. Khan is a leading advocate for a stronger anti-trust stance against corporations and is already taking steps to strengthen the agency’s authority.

Facebook tried to dissuade Khan from participating in the case, arguing that her academic work on the company and her work on the House of Representatives Antitrust Committee, which investigated Facebook and other technology platforms, showed she was biased.

The FTC said in its statement that the agency’s general counsel reviewed and dismissed Facebook’s denial request. The FTC voted 3-2 to file the amended complaint, with Khan joining the agency’s two other Democrats on the case that Republican commissioners voted against.

“Because the case is being prosecuted in a federal judge, the company is being afforded adequate constitutional protection from due process,” the FTC said.

The lawsuit is part of a broad-based effort by lawmakers and competition authorities to contain the power of America’s largest technology companies. In addition to the Facebook case, the Department of Justice and attorneys general have several lawsuits pending against Google across the country, while Democrats and Republicans on Capitol Hill are pushing a series of laws that would impose new restrictions on the company’s operations.

Minnesota Democratic Senator Amy Klobuchar, chairwoman of the Senate Antitrust Committee, welcomed the new complaint.

“Facebook’s long history of anticompetitive behavior is no secret,” Klobuchar said in a statement. “The company’s acquisitions of Instagram and WhatsApp made the digital landscape less competitive and ultimately harmed consumers.”


“This leads to workarounds like opening up its APIs or allowing data portability to users outside of the app family, rather than separation. We believe that given Facebook’s first-party advantage, this will not hurt revenue growth in the short to medium term. ”- Mandeep Singh, BI Senior Technology Industry AnalystClick here to read the study

Proponents of the Facebook lawsuit said Boasberg’s decision demonstrated the legal obstacles the government faces in filing monopoly cases. Reform proponents say decades of court rulings have effectively allowed dominant companies to pursue anti-competitive tactics and that Congress needs to give new powers to enforcement agencies.

Boasberg has not only discarded the FTC case. He also dismissed a parallel case by attorneys general, headed by New York, without giving them an opportunity to try again. The judge said states had waited too long to challenge Facebook’s acquisitions. Facebook bought Instagram in 2012 and WhatsApp in 2014. The legal doctrine that applies to states does not apply to the FTC. The states have appealed to overturn the judge’s decision.

The new FTC complaint provides details about active Facebook users and time spent on the platform based on Comscore Inc. data. The FTC said that Facebook’s share of time users of social networking apps in the US has been over 80% since 2012, and that its daily active user share has been over 70% since 2016. Much of the new data submitted by the FTC has been blacked out in the lawsuit, however.

As evidence of Facebook’s power over the market, the FTC cited profit margins that have “significantly exceeded” the average for companies in the S&P 500 index since 2013, according to user data, “the FTC said. As the world’s sixth-largest publicly traded company by US dollar market value, investors believe the company’s monopoly power is permanent, the FTC said.

In addition to targeting the Instagram and WhatsApp deals, the FTC accused Facebook of engaging in anti-competitive behavior by only allowing third-party apps to connect to their platform on condition that they are not competing with Facebook. The FTC argued that the policy aimed to eradicate competition threats.

In his June decision, Boasberg had dismissed this part of the case on the grounds that companies are not obliged to do business with other companies and “refuse to do business” even to prevent a competitor from competing under the antitrust law established by the courts.

“A monopoly is not required to deal with its competitors, and a refusal to do so is generally lawful,” wrote Boasberg. “The FTC can therefore do nothing by rewriting Facebook’s adoption of a policy of refusing to do business with all competitors as executing an illegal plan to maintain monopoly.”

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