[Law & Tech] U.S. federal judge dismisses antitrust violations complaints against Facebook

Antitrust complaints, filed by the U.S. government and most states against the social media giant, Facebook, were dismissed by a federal judge on Monday.

In two distinct complaints filed by the federal and state regulators, the major contention against Facebook was around violating the antitrust laws. U.S District Judge, James Boasberg while giving a ruling in favor of Facebook, dismissed the complaints. The dismissal was ordered before any trial proceedings had begun.

While dismissing the complaint, Judge James Boasberg stated that the Federal Trade Commission (FTC) had failed to establish Facebook’s monopoly in the market of Personal Social Networking Services. Furthermore, he also stated that FTC can bring in the amended complaint, establishing monopoly within the period of 30 days.

The ruling accordingly states that,

“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. 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.”

Two complaints:

FTC had initiated two distinct actions through two complaints against Facebook.

The first complaint stated that the practice of acquiring firms that were positioned as competitors viz, Whatsapp and Instagram was anti-competitive.

The second complaint stated that the adoption of policies that prevented ‘interoperability’ with other applications was also anti-competitive.

Such practices hinder the growth of the other companies and businesses to develop into substantial competition for Facebook.

The suits hence filed sought equitable relief and sought for “divestiture or reconstruction of businesses”. The suit also sought that the company should not indulge in similar practices in the future.

Courts Ruling:

While dismissing both the complaints, the Court stated that,

“The Court will grant Facebook’s Motion to Dismiss, but it will dismiss without prejudice only the Complaint, not the case. The Court will also grant leave to amend and order Plaintiff to file an amended Complaint within thirty days.”

While ruling on the issue of interoperability, the court stated that although there is nothing unlawful about such policy in general, and in instances of specific violations, the FTC would lack any statutory authority to seek an injunction based on the long past conduct. The said revocations of interoperability have been stated to have happened in 2013, i.e., seven years before the complaints have been filed.

The court accordingly stated that, “Regardless of whether the FTC can amend its Complaint to plausibly allege market power and advance this litigation, then, the conduct it has alleged regarding Facebook’s interoperability policies cannot form the basis for Section 2 liability.”

On the issue of the second complaint about acquiring Instagram and Whatsapp, the Court states that “… the Court rejects Facebook’s argument that the FTC lacks authority to seek injunctive relief against those purchases. Whether other issues arise in a subsequent phase of litigation is dependent on how the Government wishes to proceed.”

Such dismissal also saw a change in the market prices of shares of Facebook, as reported by Reuters. The report stated that “Facebook shares rose more than 4% after the ruling. The share price rise put Facebook's market capitalization over $1 trillion for the first time.”[1]

It is worth noting that currently, six bills, amending laws related to anti-competitive practices in the U.S. are under discussion. Only recently, the U.S. House Judiciary Committee advanced those six bills, including a bill that suggest breaking the monopoly held by the BigTech firms.

See: https://lawbeat.in/top-stories/law-tech-six-bills-including-break-em-bill-passed-us-house-representatives-judiciary