FTC Refiles Antitrust Lawsuit Against Facebook, Alleging Social Giant Has Had a Monopoly Since 2011

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UPDATED: The Federal Trade Commission filed an amended antitrust complaint against Facebook, after its earlier lawsuit was dismissed over insufficient evidence that the social media giant held a monopoly.

The agency said the amended lawsuit includes “additional data and evidence to support the FTC’s contention that Facebook is a monopolist that abused its excessive market power to eliminate threats to its dominance,” including metrics on time spent on Facebook’s services and daily and monthly user data.

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“Facebook has today, and has maintained since 2011, a dominant share of the relevant market for U.S. personal social networking services,” the complaint filed Thursday alleges. “Individually and collectively, these metrics provide significant evidence of Facebook’s durable monopoly power in social networking services.”

Facebook, in a statement Thursday responding to the FTC lawsuit, said in part, “It is unfortunate that despite the court’s dismissal of the complaint and conclusion that it lacked the basis for a claim, the FTC has chosen to continue this meritless lawsuit.” The company insisted that “There was no valid claim that Facebook was a monopolist — and that has not changed.”

The FTC’s vote to file the amended complaint was 3-2, along party lines with Democrats carrying the motion, led by FTC Chair Lina Khan, a Biden appointee. Facebook had filed a petition for Khan to recuse herself from the antitrust case, citing her work on the House’s antitrust report on Big Tech last year. The FTC dismissed the petition, saying its Office of General Counsel “carefully reviewed” Facebook’s petition and determined that because the case will be prosecuted before a federal judge “the appropriate constitutional due process protections will be provided to the company.”

In June, a U.S. district court tossed out the FTC’s previous antitrust complaint against Facebook, 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.

A copy of the 80-page amended lawsuit, filed in the U.S. District Court for the District of Columbia, is available at this link.

The FTC’s refiled complaint cites data provided by Comscore in trying to make the case that Facebook holds a monopoly in the U.S. — but the relevant stats are redacted in the publicly released version of the document. According to the agency’s lawsuit, Snapchat is the second-largest social media company in the U.S. but has a user base and engagement levels that are only a “fraction of the size” of Facebook and Instagram services.

In releasing Q2 results, Facebook reported that daily active users across all its apps (Facebook, Instagram, WhatsApp and Messenger) averaged 2.76 billion for the month of June 2021. Snap said Snapchat’s daily active users averaged 293 million in the second quarter of 2021, up 23% year-over-year.

The FTC also cited other antitrust regulators’ findings that Facebook holds monopoly power, including the U.K.’s Competition and Markets Authority conclusion in 2020 that “Facebook has significant and enduring market power in social media” within the country.

The FTC’s new complaint — like its previous lawsuit — alleges that after repeated failed attempts to develop innovative mobile features for its network, Facebook instead resorted to “an illegal buy-or-bury scheme” to maintain its dominance.

That included its $1 billion acquisition of rival Instagram in 2012 and Facebook’s $19 billion deal for mobile messaging app WhatsApp in 2014, the FTC alleges. In addition, Facebook lured app developers to the platform, surveilled them for signs of success and then “buried” them when they became competitive threats.

“Facebook lacked the business acumen and technical talent to survive the transition to mobile,” said Holly Vedova, acting director of the FTC’s Bureau of Competition, said in a statement. “After failing to compete with new innovators, Facebook illegally bought or buried them when their popularity became an existential threat. This conduct is no less anticompetitive than if Facebook had bribed emerging app competitors not to compete.”

In its statement Thursday, Facebook pointed out that its acquisitions of Instagram and WhatsApp were reviewed and cleared by regulators “many years ago, and our platform policies were lawful.”

“The FTC’s claims are an effort to rewrite antitrust laws and upend settled expectations of merger review, declaring to the business community that no sale is ever final,” the company said, echoing previous statements. “We fight to win people’s time and attention every day, and we will continue vigorously defending our company.”

According to the FTC’s amended complaint, Facebook continues to monitor the industry for competitive threats to its monopoly over social media. Facebook is likely to impose anticompetitive conditions on access to its platform and seek to acquire companies it perceives as potential threats, the FTC asserted, especially when it next faces “acute competitive pressures from a period of technological transition,” per the lawsuit.

The FTC is seeking the same remedies as its previous antitrust suit against Facebook, including an order that the company divest or restructure its businesses, “including, but not limited to, Instagram and/or WhatsApp,” in a way that would “restore the competition that would exist” in the absence of the alleged anticompetitive conduct.

FTC commissioner Christine Wilson, a Trump appointee, issued a dissenting statement, in which she noted that the FTC reviewed Facebook’s acquisitions of Instagram and WhatsApp and allowed them to proceed. “I believe it is bad policy to undermine the integrity of the premerger notification process established by Congress and the repose that it provides to merging parties that have faithfully complied with its requirements,” Wilson wrote.

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