Facebook Wins Dismissal of U.S., States’ Monopoly Lawsuits

(Bloomberg) — Facebook Inc. won the dismissal of two antitrust
cases filed by the federal government and a coalition of states
when a judge threw out the lawsuits. The social media platform
shares rose.

U.S. District Judge James Boasberg in Washington on Monday
granted Facebook’s request to dismiss the complaints, filed last
year by the U.S. Federal Trade Commission and state attorneys
general led by New York’s Letitia James.

The judge said in the opinion that the FTC failed to meet the
burden for establishing that Facebook has a monopoly in social
networking. He said the agency could refile the complaint within 30
days.

“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.

Facebook shares rose as much as 4.4% in New York following the
ruling.

With the ruling, Facebook has escaped — at least for now — the
most significant regulatory threat to its business to emerge out of
the wider crackdown on U.S. technology giants.

The decision delivers a blow to the FTC and the states, which
claimed Facebook violated antitrust laws by buying photo-sharing
app Instagram and messaging service WhatsApp in order to cut off
emerging competitive threats and protect its monopoly.

It puts new emphasis on antitrust legislation advanced by the
Judiciary Committee last week that would make it easier for
enforcers to challenge anticompetitive conduct by the biggest tech
platforms.

Antitrust Hurdles

Boasberg’s decision to toss the Facebook complaints shows the
hurdles U.S. antitrust enforcers face in trying to take on the
internet giants. Officials on their own can’t break up companies or
impose other remedies, but instead must persuade judges to take
action. The process can take years.

The Facebook lawsuits were filed in December as part of a
widening crackdown on America’s tech giants. The cases followed a
Justice Department complaint against Alphabet Inc. for allegedly
monopolizing internet search, and the findings of a House
investigation that accused tech companies of abusing their
dominance. Lawmakers have since proposed a pile of bills that would
cast a broad regulatory net over the companies.

The Facebook lawsuits centered on the 2012 acquisition of
Instagram and the 2014 takeover of WhatsApp. Officials say Facebook
made the deals because it saw both companies as threats to its
business. Rather than compete with its own products, Facebook
followed Chief Executive Officer Mark Zuckerberg’s mantra: “it is
better to buy than compete,” according to the FTC complaint.

Facebook offered $1 billion for Instagram when it had only 25
million users and no revenue, but had already started to capture
the market for mobile photo-sharing. Zuckerberg said the threat
from Instagram was “really scary,” according to the FTC complaint.
The company paid $19 billion for WhatsApp because it saw messaging
apps as another danger to its business. A Facebook executive said
the apps “might be the biggest threat we’ve ever faced as a
company,” the FTC complaint said.

Facebook attacked the complaints on several grounds. One of its
key arguments was that the FTC investigated both acquisitions when
they were announced and allowed both deals to proceed. While
antitrust enforcers can challenge completed mergers, Facebook
argued the FTC’s case was unprecedented and the agency never
explained why its prior decisions approving the purchases were
mistaken. The government simply wants a “do-over,” Facebook
said.

The company also had argued that a U.S. Supreme Court ruling in
April that curtailed the FTC’s authority to recover money for
defrauded consumers required that the complaint be dismissed.

The case is Federal Trade Commission v. Facebook Inc.
20-cv-3590, U.S. District Court, District of Columbia
(Washington).

(Bloomberg) — Facebook Inc. won the dismissal of two antitrust
cases filed by the federal government and a coalition of states
when a judge threw out the lawsuits. The social media platform
shares rose.

U.S. District Judge James Boasberg in Washington on Monday
granted Facebook’s request to dismiss the complaints, filed last
year by the U.S. Federal Trade Commission and state attorneys
general led by New York’s Letitia James.

The judge said in the opinion that the FTC failed to meet the
burden for establishing that Facebook has a monopoly in social
networking. He said the agency could refile the complaint within 30
days.

“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.

Facebook shares rose as much as 4.4% in New York following the
ruling.

With the ruling, Facebook has escaped — at least for now — the
most significant regulatory threat to its business to emerge out of
the wider crackdown on U.S. technology giants.

The decision delivers a blow to the FTC and the states, which
claimed Facebook violated antitrust laws by buying photo-sharing
app Instagram and messaging service WhatsApp in order to cut off
emerging competitive threats and protect its monopoly.

It puts new emphasis on antitrust legislation advanced by the
Judiciary Committee last week that would make it easier for
enforcers to challenge anticompetitive conduct by the biggest tech
platforms.

Antitrust Hurdles

Boasberg’s decision to toss the Facebook complaints shows the
hurdles U.S. antitrust enforcers face in trying to take on the
internet giants. Officials on their own can’t break up companies or
impose other remedies, but instead must persuade judges to take
action. The process can take years.

The Facebook lawsuits were filed in December as part of a
widening crackdown on America’s tech giants. The cases followed a
Justice Department complaint against Alphabet Inc. for allegedly
monopolizing internet search, and the findings of a House
investigation that accused tech companies of abusing their
dominance. Lawmakers have since proposed a pile of bills that would
cast a broad regulatory net over the companies.

The Facebook lawsuits centered on the 2012 acquisition of
Instagram and the 2014 takeover of WhatsApp. Officials say Facebook
made the deals because it saw both companies as threats to its
business. Rather than compete with its own products, Facebook
followed Chief Executive Officer Mark Zuckerberg’s mantra: “it is
better to buy than compete,” according to the FTC complaint.

Facebook offered $1 billion for Instagram when it had only 25
million users and no revenue, but had already started to capture
the market for mobile photo-sharing. Zuckerberg said the threat
from Instagram was “really scary,” according to the FTC complaint.
The company paid $19 billion for WhatsApp because it saw messaging
apps as another danger to its business. A Facebook executive said
the apps “might be the biggest threat we’ve ever faced as a
company,” the FTC complaint said.

Facebook attacked the complaints on several grounds. One of its
key arguments was that the FTC investigated both acquisitions when
they were announced and allowed both deals to proceed. While
antitrust enforcers can challenge completed mergers, Facebook
argued the FTC’s case was unprecedented and the agency never
explained why its prior decisions approving the purchases were
mistaken. The government simply wants a “do-over,” Facebook
said.

The company also had argued that a U.S. Supreme Court ruling in
April that curtailed the FTC’s authority to recover money for
defrauded consumers required that the complaint be dismissed.

The case is Federal Trade Commission v. Facebook Inc.
20-cv-3590, U.S. District Court, District of Columbia
(Washington).