A US District Court dismissed a complaint filed by the Federal Trade Commission against Facebook on Monday, dealing a major blow to the federal government’s antitrust case against the firm. The action, which was launched late last year, aimed to undo Facebook’s purchases of Instagram and WhatsApp. A related case brought by a group of state attorneys general was also dismissed by the judge.
The FTC claimed in its initial case that Facebook broke federal antitrust rules by buying a potential competitor in the social media sector. Judge James E. Boasberg dismissed the complaint on Monday, writing that the FTC provided insufficient proof supporting its primary argument – that Facebook has monopoly power.
Boasberg stated, “The FTC has failed to plead enough facts to plausibly demonstrate an essential element of all of its Section 2 claims —namely, that Facebook has monopoly power in the market for Personal Social Networking (PSN) Services.” “On that count, the complaint contains nothing except the bare allegation that the corporation has had and continues to have a ‘dominant share of that market (in excess of 60%).’”
The charges against Facebook’s interoperability limits were also dismissed by Boasberg, who determined that the regulations had been in place for too long to be vulnerable to FTC action.
A request for comment from The Verge was not immediately returned. However, in response to the firing, Facebook’s stock soared, surpassing $1 trillion in market capitalization for the first time in the company’s history.
A parallel anti-monopoly complaint brought against Facebook by a group of state attorneys general was also dismissed. In December, nearly every state attorney general joined a complaint against Facebook, alleging the same things as the FTC. However, in a separate ruling issued on Monday, Boasberg dismissed that case, stating that a specific civil law doctrine barred the coalition from contesting acquisitions made so long ago.
Judge Boasberg, for example, allowed room for the FTC to modify its case and undo previous Facebook mergers. The FTC has until July 29th to file a fresh complaint clarifying its position about Facebook’s market dominance, and the judge made it clear that the civil doctrine that doomed the state attorneys general did not apply to the FTC’s case.
“In a Section 2 challenge to long-ago mergers, an injunction under Section 13(b) is theoretically available,” Boasberg said in the FTC judgement, “so long as the defendant still possesses the purchased assets or shares, as is the situation here.”
The inherent difficulty of establishing monopoly power for a free online service, as the FTC is now expected to do, was also mentioned by Boasberg. According to Boasberg’s assessment, “this issue concerns no ordinary or intuitive market.” “Rather, PSN [Personal Social Networking] services are free to use, and the exact definition of a PSN service — that is, which components of a company’s mobile app or website are included in that definition and which are omitted — is rarely crystal clear.”
The court’s decision could lead to more aggressive legislative action, as Congress is now working on substantial antitrust legislation for the computer industry. The House Judiciary Committee adopted a package of proposals this week aimed at limiting Big Tech’s market clout, including merger restrictions and new interoperability requirements. All six proposals are on their way to the House floor, and parallel bills in the Senate are expected to be submitted in the following weeks.
