Victory for Facebook as court dismisses lawsuits seeking to split company

In a significant blow to US regulators’ attempt to rein in big tech, a federal judge has dismissed lawsuits brought against Facebook by the Federal Trade Commission and a broad coalition of state attorneys general.

The US government and 48 states and districts sued Facebook in December 2020, accusing the tech company of abusing its market power in social networking to crush smaller competitors and seeking remedies that could include a forced spin-off of the social network’s Instagram and WhatsApp messaging services.

But on Monday, the US district judge James Boasberg ruled that the lawsuits were “legally insufficient” and didn’t provide enough evidence to prove that Facebook was a monopoly. The ruling dismisses the complaint but not the case, meaning the FTC could refile another complaint.

“These allegations – which do not even provide an estimated actual figure or range for Facebook’s market share at any point over the past 10 years – ultimately fall short of plausibly establishing that Facebook holds market power,” he said.

The FTC had alleged Facebook engaged in “a systematic strategy” to eliminate its competition, including by purchasing smaller up-and-coming rivals such as Instagram in 2012 and WhatsApp in 2014. The New York attorney general, Letitia James, said when filing the suit that Facebook “used its monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users”.

Boasberg dismissed the separate complaint made by the state attorneys general as well. He said the attorneys general waited too long to challenge Facebook’s acquisitions of Instagram and WhatsApp, which they accused of being monopolistic.

Critics are calling the rulings a major setback in the quest to break up the behemoths of Silicon Valley.

“This decision makes it clear that we can’t sit back and hope that the courts save us from big tech monopolies,” said Evan Greer, the director at digital rights group Fight for the Future.

Greer and others said the decision underscores the need for more comprehensive antitrust law from Congress. The Missouri senator Josh Hawley, a fierce critic of big tech, called the decision “deeply disappointing”, and said the court acknowledged Facebook has “massive market power but essentially shrugged its shoulders”.

Facebook shares surged in the aftermath of the decision, bringing the company’s market value beyond $1tn for the first time. Though the outcome marks a setback for those who would like to see Facebook reined in, state and federal prosecutors have 30 days to refile antitrust complaints that address the judge’s concerns.

“This is a very bad sign for the suit and in the ongoing battle with big tech,” said Rebecca Allensworth, a professor of law at Vanderbilt University. “But this is one battle in an ongoing war.”

Facebook, in a statement given to the Associated Press, said: “We are pleased that today’s decisions recognize the defects in the government complaints filed against Facebook. We compete fairly every day to earn people’s time and attention and will continue to deliver great products for the people and businesses that use our services.”

The FTC lawsuit marked one of the broadest bipartisan attempts to address antitrust concerns with Facebook and sought significant remedies, including spinning off the Facebook subsidiaries Instagram and WhatsApp. But more opportunities to challenge the company are on the horizon.

This month, Joe Biden appointed Lina Khan, antitrust researcher and critic of the major tech companies, to chair the Federal Trade Commission, which is likely to result in more hardline actions against big tech in the coming months and years. Khan will be responsible for rewriting the lawsuit dismissed today to address the judge’s concerns, the New York Times reported. Meanwhile, the House judiciary antitrust subcommittee advanced six bills last week that would overhaul antitrust laws.

“Today’s development in the FTC’s case against Facebook shows that antitrust reform is urgently needed,” tweeted Ken Buck, a Republican representative from Colorado who serves as the ranking Republican on the subcommittee. “Congress needs to provide additional tools and resources to our antitrust enforcers to go after big tech companies engaging in anticompetitive conduct.”


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