Facebook’s request to dismiss FTC’s antitrust lawsuit has been denied

The Federal Trade Commission (FTC) alleges that Facebook has illegally stifled its competition by snatching away its competitors, such as Instagram and WhatsApp.

Sarah Teo / CNET

A federal judge on Tuesday denied Facebook’s request to dismiss a revised antitrust complaint filed by the US Federal Trade Commission.

The amended lawsuit, filed in August by the Federal Trade Commission (FTC), accuses the tech company of illegally maintaining its dominance in social networks by acquiring or eliminating companies it considers competitive threats. Facebook, which in October renamed itself Meta, owns the popular photo service Instagram and the messaging app WhatsApp.

The decision represents a legal setback for Facebook, although US District Judge James Boasberg also noted that the FTC “may face a difficult task down the road in proving its allegations”. The judge also narrowed the scope of the case by not allowing the agency to move forward with accusations that Facebook’s interoperability policies for developers helped the social media giant maintain its dominance. He said Facebook got rid of those policies in 2018.

Last year, Boasberg dismissed a 2020 FTC antitrust complaint, saying the agency had not provided enough evidence that Facebook had a monopoly on power in personal social networks. What constitutes a social network is “almost not entirely clear,” the judge said, noting that Facebook’s services are free to consumers. Then the FTC reviewed the lawsuit and included more data and evidence to support its claim that Facebook was a monopoly that abused its market power to harm its competitors. The Federal Trade Commission claimed that Facebook’s purchase of Instagram and WhatsApp leads to weaker services with lower privacy and data protection along with fewer choices for consumers.

In a 48-page opinion filed on Tuesday, Boasberg said the FTC had cleared the case to move forward in the case, saying the agency had “now claimed enough facts” to show that Facebook had monopoly power to grab hold of its competitors.

In the amended complaint, the FTC cites data from Comscore showing the number of monthly active users on Facebook and Instagram in the United States and the amount of time they spend on the app per day. The FTC also defined personal social networks, stating that services “enable and are used by people to maintain personal relationships and share experiences with friends, family, and other personal relationships in a shared social space.” The agency said Twitter, Reddit, Pinterest, YouTube, Spotify, Netflix and Hulu differ from personal social networks for various reasons.

Facebook questioned the accuracy of the data, but the judge said it would be “inappropriate” to dismiss the revised complaint because it did not include “perfect data (may not be there)” about the amount of time Facebook and Instagram users spend interacting with friends and family rather than viewing content like Music videos.

The court also dismissed Facebook’s argument that FTC Chair Lina Khan should have disqualified herself from participating in the committee’s vote to re-file the lawsuit. The FTC filed its original complaint in December 2020, before Khan joined the commission in June.

“Although the court recognizes the importance of its vote, it would be an exaggeration to treat Khan as the sole instigator in the present case,” Boasberg said in the advisory opinion.

A spokesperson for Meta, formerly known as Facebook, said, “The evidence will reveal the primary weakness of the claims.”
Made by FTC. “Our investments in Instagram and WhatsApp have transformed them into what they are today. It’s been good for the competition, and good for the people and businesses that choose to use our products,” the spokesperson said.

“FTC staff have filed a strong, amended complaint, and we look forward to prosecution,” said Holly Fedova, director of the FTC’s Office of Competition.

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