The Federal Trade Commission (FTC) on Wednesday rejected Facebook’s (FB) motion to dismiss the regulator’s lawsuit aimed at resolving the social media giant as the government continues to scrutinize big tech.
“The court should reject Facebook’s application,” the commission said in a document filed late Wednesday. “Facebook has monopoly power over Personal Social Networking (PSN) services in the US and is violating antitrust laws by maintaining its monopoly.” by means other than competition on the merits. “
In March, Facebook argued in its motion to dismiss that the FTC’s lawsuit was legally flawed because it failed to identify a relevant market in which the company allegedly had a monopoly. According to Facebook, there is no PSN market to establish a cartel claim as its services are free.
Facebook also said the agency failed to credibly claim monopoly power over a market and failed to make reasonable allegations that the company engaged in illegal exclusionary behavior. Facebook said the FTC also has no power to sue over already approved measures: Facebook’s acquisition of messaging service WhatsApp in 2014 for $ 19 billion, and photo-sharing website Instagram in 2012 for $ 1 Billion dollars.
The FTC’s lawsuit seeks to force Facebook to cancel WhatsApp and Instagram. The social media giant is also facing a lawsuit from dozens of attorneys general alleging it is violating antitrust laws by buying out competitors and depriving consumers of alternatives that would better protect their privacy
“Surprising” when the case is resolved early
The controversial stance over whether an antitrust proceeding involving neither product nor service prices can continue is likely to thwart the case against Facebook and Big Tech antitrust cases, including those pending against Google (toget, togetL ).
The story goes on
“No court has ever ruled that such a free market for antitrust goods exists, and the FTC does not claim there is one,” said Facebook’s motion.
Mark Zuckerberg, CEO of Facebook, testifies remotely on July 29, 2020 on Capitol Hill in Washington, USA. US House Judiciary Committee on REUTERS
However, experts say it is a long way to go for Facebook to reject the case at this point.
“Overall … it would be surprising if such a high profile case were resolved in this early filing for dismissal,” Erika M. Douglas, assistant professor at Temple University’s Beasley School of Law, told Yahoo Finance in March. Douglas has worked for Facebook in the past but has never been an employee of the company.
The FTC says there is a relevant market
Free or not, the FTC argues in its filing that courts have convicted monopolists for resorting to anti-competitive practices similar to Facebook’s actions, and that a relevant market does indeed exist because PSN services in the US are not “reasonable services are interchangeable with others.
“Facebook’s dominant position in PSN services is protected by huge barriers to entry,” the FTC stated that new entrants are faced with the challenge of displacing an established PSN service that users’ friends and family are already participating in, particularly because of the User switching cost – sacrificing the time and effort they invested in developing a story and connections with the service.
Eleanor Fox, a professor at NYU School of Law, told Yahoo Finance in March that she did not expect the court to require the FTC to provide evidence at any preliminary stage that consumers were paying higher prices because of their acquisitions or using alternative social media – Have used platforms less.
“I don’t think they have to, and I don’t think the court will take up the issue at this point in the litigation, but this is where the legal controversy lies and this is where lawyers can have different views, with more conservative judges putting higher burdens on the Plaintiff, ”said Fox.
According to Douglas, the most interesting question if the case continues is whether Facebook had an antitrust obligation to deal with rivals or give them access to the Facebook platform. According to the FTC, Facebook made its platform available to developers between 2011 and 2018 only on the condition that their apps neither competed with Facebook nor advertised its competitors.
“Facebook penalized apps that violated these terms by terminating access to the Find Friends API and other APIs,” the commission said. “Facebook’s cancellations were aimed at promising competitive threats, including PSN apps, apps with some social features, and mobile messaging services.”
Alexis Keenan is a legal reporter at Yahoo Finance and a former litigation attorney. Follow Alexis Keenan on Twitter @alexiskweed.
Daniel Howley @ DanielHowley also contributed to this report.
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