FTC and State Antitrust Lawsuits Against Facebook Dismissed by Federal Court

·3-min read

Facebook won a legal victory Monday after a U.S. district court tossed out the Federal Trade Commission’s antitrust complaint against the social-media company, saying the agency had failed to make a case that Facebook held a monopoly. The court also dismissed a related lawsuit against Facebook brought by more than 40 state attorneys general.

Facebook’s stock popped on the news to all-time highs, closing up 4.2% to 355.64 per share for the day. That pushed the social giant’s market cap over $1 trillion for the first time.

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In a lawsuit filed in December 2020, the FTC — in coordination with state AGs — accused Facebook of illegally acquiring competitors Instagram and WhatsApp in an abuse of its monopoly power. The lawsuits had sought to force Facebook to divest Instagram and WhatsApp.

In a ruling Monday, Judge James Boasberg of the U.S. District Court for the District of Columbia found that the FTC had not provided “any indication of the metric(s) or method(s) it used” to support the assertion that Facebook holds a market share of more than 60% in the social networking market.

“Although the Court does not agree with all of Facebook’s contentions here, it ultimately concurs that the agency’s Complaint is legally insufficient and must therefore be dismissed,” Boasberg wrote. “The FTC has failed to plead enough facts to plausibly establish a necessary element of all of its Section 2 claims — namely, that Facebook has monopoly power in the market for Personal Social Networking (PSN) Services.”

Read the ruling at this link.

A Facebook rep said in a statement, “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’s lawsuit had sought a permanent injunction forcing Facebook to divest or restructure assets including (but not limited to) Instagram and WhatsApp, as well as prohibiting Facebook from imposing anticompetitive conditions on software developers and requiring the company to seek prior notice and approval for future mergers and acquisitions.

Also Monday, Boasberg also threw out the state AGs’ lawsuit because the state attorneys general had waited too long to mount a legal challenge to Facebook’s deals for Instagram (acquired in 2012) and WhatsApp (bought in 2014).

According to the rulings, the FTC and state prosecutors will have up to 30 days to file new antitrust complaints against Facebook that address the court’s concerns.

In a separate case, Facebook in 2019 entered into a 20-year settlement with the FTC to settle allegations of privacy violations, under which the company paid a record-breaking $5 billion fine and agreed to submit to new oversight by the commission.

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