A federal court on Monday dismissed the Federal Trade Commission’s antitrust complaint against Facebook, as well as a parallel case involving 48 attorneys general, which meant a serious setback for the agency’s complaint that could have led to Facebook’s divestment of Instagram and WhatsApp.
Facebook’s shares rose more than 4% on Monday following the rulings, bringing the social media company’s market cap above $ 1 trillion for the first time.
“We are pleased that today’s decisions recognize the shortcomings of the government complaints against Facebook,” the company said in a statement. “We compete fairly every day to win people’s time and attention, and we will continue to deliver great products to the people and companies who use our services.”
The FTC sued the company last December along with attorneys general from 48 states, arguing that Facebook had a systematic strategy to remove threats to its monopoly, including the 2012 and 2014 acquisitions of Instagram and WhatsApp that the FTC previously took had approved.
However, the court ruled Monday that the FTC failed to prove its main claim and the cornerstone of the case: that Facebook holds monopoly power in the US personal social networking market.
“While the court here does not agree with all of Facebook’s allegations, it ultimately agrees that the agency’s lawsuit is legally inadequate and must therefore be dismissed,” the US District Court file for the District of Columbia said. “The FTC has failed to provide enough facts to plausibly support a necessary element of all of its Section 2 claims – that Facebook has monopoly power in the Personal Social Networking (PSN) service market.”
The court found that the FTC did not provide enough detailed data to prove that Facebook has market power in the loosely defined market for personal social networking services.
“The lawsuit undoubtedly relates to specific assertions of fact relating to consumer switching preferences,” the court wrote. “These claims – which at no point in the past decade provide an estimated actual number or range for Facebook’s market share – are ultimately implausible to plausibly demonstrate Facebook’s market power.”
Elsewhere, the filing states that the FTC’s lawsuit appeared to assume the court would approve Facebook as a monopoly.
“The FTC’s complaint says almost nothing concrete about the key question of how much power Facebook actually had and still has in a properly defined antitrust product market,” the filing said. “It’s almost like the agency would expect the court to simply nod at the traditional notion that Facebook is a monopoly.”
The verdict is not necessarily the end of the process. The court acknowledged that the FTC may be able to address the weaknesses in its reasoning and left open the option to file an amended lawsuit and proceed with the lawsuit.
“The FTC is carefully reviewing the opinion and evaluating the best option for the future,” said an FTC spokesman.
The court also disagreed with Facebook’s argument that the FTC has no authority to attack the Instagram and WhatsApp acquisitions that took place in 2012 and 2014. On the contrary, it ruled that the FTC can still move to dispose of these acquisitions – but only if it succeeds in its legal arguments over Facebook’s monopoly power.
However, the court dismissed the parallel case entirely from the attorneys general, saying that the long delay between the acquisitions and filing the 2020 case was unprecedented at the state level and that the state’s argument that Facebook is preventing interoperability with competing apps fails a claim to be asserted according to the applicable antitrust law, since such a policy is not illegal. “
“We are reviewing this decision and examining our legal options,” said a spokesman for New York Attorney General Letitia James.
Read the full verdict in the FTC case here.
Read the full state judgment here.