Brief # 52 – Technology
Federal Judge Dismisses Facebook Antitrust Cases
By Henry Lenard
July 1, 2021
Policy Summary
Two antitrust cases filed against Facebook Inc. by the U.S. Federal Trade Commission and a coalition of nearly all state attorneys general led New York’s Letitia James were dismissed by Judge James E. Boasberg of the U.S. District Court of the District of Columbia on June 28, 2021.
Judge Boasberg said the FTC lawsuit filed in December failed to show that Facebook had monopoly power in the social media sector.
The FTC case was the government’s first attempt to reign in Facebook’s social networking dominance in the face of increased Congressional scrutiny of Facebook’s practices.
The judge said the FTC could refile an amended complaint within 30 days.
Judge Boasberg also dismissed the case brought by the states, criticizing them for waiting too many years after Facebook’s acquisitions of Instagram (2012) and WhatsApp (2014) to challenge the deals.
The stock market reacted to the news by pushing Facebook’s valuation to in excess of $1 trillion.
Policy Analysis
Judge Boasberg’s Facebook ruling underscored the difficulty regulators confront in taking on Big Tech. The judge said the FTC lawsuit was “legally insufficient” by failing to provide enough evidence to prove that Facebook had a monopoly in the personal social-networking sector and that its practices harmed competition.
The ruling dismisses the complaint but not the case, meaning the FTC could refile another complaint.
The FTC claimed that Facebook has had monopoly power since at least 2011, controlling “in excess of 60 percent” of the “personal social networking” market. The judge noted that the FTC failed to offer any metrics as to how it arrived at that figure, such as revenues or users.
“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,” wrote Boasberg.
Boasberg said regulators have a greater challenge against companies such as Facebook than they would against a more traditional business. The judge wrote that sites like Facebook “are free to use, and the exact metes and bounds of what even constitutes a [personal social network] service — i.e., which features of a company’s mobile app or website are included in that definition and which are excluded — are hardly crystal clear.”
The regulatory agency also narrowly defined the personal social networking market, excluding professional social networks such as LinkedIn and video streaming companies like YouTube.
Judge Boasberg’s ruling shows how antitrust law standards can be difficult for federal regulators to meet.
The decision was condemned by those calling for the reigning in of Big Tech, with calls for revisiting antitrust laws, which now require a company is shown to be a monopoly before a case can be pursued.
The House Judiciary Committee recently approved six bills focusing on Big Tech that would result in the most dramatic change to antitrust law in decades.
The bills include updating merger filing fees; determining venues for antitrust suits brought by state attorneys general; preventing Big Tech companies from buying upcoming competitors in an effort to eliminate competition; prohibiting Big Tech firms from giving their products and services preference over those of competitors; making it easier to use products from different companies together; and allowing federal regulators to sue to break up large tech companies when their role as operator of a platform creates an “irreconcilable conflict of interest” in their other business lines.
The next step for these bills, which have varying degrees of bipartisan support, will be a debate and vote in the full House. Already there is intense lobbying against the bills from Big Tech and the trade organizations representing the industry.
Engagement Resources
FTC v. Facebook decision:
New York v. Facebook decision:
American Economic Liberties Project statement:
House Judiciary Committee Chairman Jerrold Nadler statement on passage of bipartisan legislation to enhance antitrust enforcement:
https://judiciary.house.gov/news/documentsingle.aspx?DocumentID=4622