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Facebook Gets Reprieve As Court Throws Out Major Antitrust Complaints

Jun 28, 2021
Originally published on June 29, 2021 6:05 am

Updated June 28, 2021 at 5:31 PM ET

A federal judge has dismissed two blockbuster antitrust complaints against Facebook, in a setback to federal and state prosecutors who were pushing for a break-up of the social media giant.

The cases, filed separately by the Federal Trade Commission and 48 state attorneys general in December, accused Facebook of crushing competition by swallowing rivals, including Instagram and WhatsApp, and stifling other would-be competitors by cutting their access to its valuable data and systems.

But Judge James Boasberg of the U.S. District Court for the District of Columbia said in Monday's ruling that prosecutors failed to prove Facebook has a monopoly in social networking.

However, the judge dismissed the complaints "without prejudice," meaning the plaintiffs can file new complaints against the company.

Judge Boasberg gave the FTC 30 days to refile its complaint. He said the agency needs to explain how it concluded that Facebook has a market share of at least 60%.

He noted that social networks are both free to use and may include a variety of services, such as mobile apps, depending on the company.

"In this unusual context, the FTC's inability to offer any indication of the metric(s) or method(s) it used to calculate Facebook's market share renders its vague '60%-plus' assertion too speculative and conclusory to go forward," he wrote.

In dismissing the states' case, Judge Boasberg said the attorneys general had waited too long to challenge Facebook's purchases of Instagram in 2012 and WhatsApp in 2014.

He referenced "the doctrine of laches, which precludes relief for those who sleep on their rights," writing: "The Court is aware of no case, and Plaintiffs provide none, where such a long delay in seeking such a consequential remedy has been countenanced in a case brought by a plaintiff other than the federal government."

The decisions are a reprieve for Facebook, which has become one of the biggest political and regulatory targets in Washington. Under President Biden, some of tech's biggest critics have been appointed to prominent positions. They include Lina Khan, who was named FTC chairwoman earlier this month, raising expectations that the agency will be more aggressive about policing how Big Tech wields its market power.

Facebook shares rose more than 4% after the district court's rulings on Monday, sending its market cap past $1 trillion for the first time.

"We are pleased that today's decisions recognize the defects in the government complaints filed against Facebook," said Facebook spokesperson Christopher Sgro. "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 decision fueled calls for an overhaul of the nation's competition laws. The House Judiciary antitrust subcommittee is advancing a bipartisan packages of bills that seek to rein in Big Tech and beef up anti-monopoly enforcement at agencies including the FTC.

"Today's development in the FTC's case against Facebook shows that antitrust reform is urgently needed," tweeted Rep. Ken Buck, R-Colo., the ranking Republican on the House Judiciary antitrust subcommittee. "Congress needs to provide additional tools and resources to our antitrust enforcers to go after Big Tech companies engaging in anticompetitive conduct."

The FTC and the office of the New York attorney general, which is leading the states' case, said they are reviewing the decisions and considering their options.

Editor's note: Facebook is among NPR's financial supporters.

Copyright 2021 NPR. To see more, visit https://www.npr.org.

RACHEL MARTIN, HOST:

A federal judge dismissed two huge antitrust complaints against Facebook. It's a big win for that company. These suits were filed back in December - one by the federal government and one by most of the country's attorneys general. But this does not mean Facebook is out of the hot seat by any stretch of the imagination. For more, we are joined by NPR tech correspondent Shannon Bond. Just a note - Facebook is among NPR's financial supporters, but we cover them like any other company. Shannon, good morning.

SHANNON BOND, BYLINE: Good morning, Rachel.

MARTIN: These lawsuits were thrown out at a very early stage of the process, right? What happened?

BOND: Right. Well, the Federal Trade Commission and these 48 attorneys general - they had accused Facebook of crushing its competition by buying up rivals, like Instagram and WhatsApp, and suffocating other companies by preventing them from accessing its platform and data. Facebook disputed these claims. It said the government hadn't shown any illegal behavior, and it asked the court to throw these suits out. And yesterday, the judge largely agreed with the company, and he tossed the complaints.

MARTIN: So let's talk about that substance. What did the judge say was wrong with these cases?

BOND: Well, of course, you know, we know Facebook boasts more than 2 billion users around the world. It's the largest social network. But Judge James Boasberg says the FTC just needs to show more evidence to back up its claim that under the law, Facebook has a monopoly. So he's given the FTC 30 days to file a new complaint addressing his concerns. Now, when it came to the states' case, the judge said their accusations about Instagram and WhatsApp just came too late. These were deals that were made years ago, right? Facebook bought Instagram in 2012. It bought WhatsApp in 2014. Now, people I talked to said that was kind of surprising. Back at the time these deals were made, the states didn't look at whether they were good or bad. And yet now the judge is saying it's too late to object. I spoke to Bill Kovacic. He's a former FTC chair and a law professor at George Washington. And he says these rulings show just how much of an uphill battle the government faces.

BILL KOVACIC: You do not expect to get knocked out of the game in the very first inning, and the judge has given them a very sobering reminder of how hard it will be to succeed with this kind of very difficult case.

MARTIN: So this is, no doubt, welcome news for Facebook. What are they saying?

BOND: Well, it's - yes, it's definitely a temporary reprieve. A spokesman says the company is pleased that the court recognized the, quote, "defects" in the government's case, says Facebook competes fairly. Investors were also happy. The stock rose after the news. So Facebook's market cap has now passed $1 trillion for the first time. Very few companies can claim that.

MARTIN: So if this is a temporary win, what's the government's next move?

BOND: Well, the FTC and the state attorneys general say they're reviewing the judge's opinions. They're weighing their options. I think we can expect them to refile this complaint. They may also appeal this dismissal. Certainly, the FTC is not going to back down, Rachel. You know, it just got a new chairwoman, Lina Khan. She's an outspoken critic of Big Tech. And Kovacic, the former FTC chair I spoke with - he told me he sees two paths forward for the agency.

KOVACIC: One is we're going to keep our foot on the accelerator when it comes to bringing tough cases. But the second path is to go to the Congress and say, see? This is why you have to do your job to give us better tools.

BOND: And when it comes to Congress, right now the House Judiciary Committee is advancing a bipartisan package of bills. They seek to rein in Big Tech, curb some of what it can do and also beef up antimonopoly enforcement at agencies, including the FTC. And just yesterday, we heard from Democrats and Republicans on the committee. They're making that case. They're saying, you know, this is exactly why we need the kind of reforms we are proposing here, this dismissal itself.

MARTIN: NPR tech correspondent Shannon Bond. Shannon, thank you for that.

BOND: Thanks, Rachel. Transcript provided by NPR, Copyright NPR.