Federal Trade Commission Takes Facebook to Court… AgainThe FTC hopes to prove in an 80-page complaint that Facebook holds damaging monopoly power over competitors
Last week, the Federal Trade Commission (FTC) filed an amended complaint against Facebook, trying again for an antitrust lawsuit after a federal judge dismissed their original complaint earlier this summer.
The updated complaint alleges that Facebook has violated antitrust laws and garnered monopoly power, namely by buying up rival companies and imposing unfair policies that “neutralize perceived competitive threats.”
Facebook is the world’s dominant online social network, with a purported three billion-plus regular users. Facebook has maintained its monopoly position in significant part by pursuing Chief Executive Officer (“CEO”) Mark Zuckerberg’s strategy, expressed in 2008: “it is better to buy than compete.” True to that maxim, Facebook has systematically tracked potential rivals and acquired companies that it viewed as serious competitive threats. Facebook supplemented this anticompetitive acquisition strategy with anticompetitive conditional dealing policies, designed to erect or maintain entry barriers and to neutralize perceived competitive threats.
Facebook continues to hold and operate the assets it acquired unlawfully and continues to keep them positioned to provide a protective “moat” around its personal social networking monopoly.
The FTC acknowledges the existence of other social media companies (such as Twitter, Pinterest, Snapchat, etc.) but argues that these companies provide different services and that none compare in size to Facebook.
You can review the entire complaint at Gizmodo.
The original complaint was, according to the Wall Street Journal, “one of the commission’s most ambitious antitrust lawsuits in decades,” but was dismissed on June 28 based on the judge’s ruling that the FTC had not provided enough evidence that Facebook is a monopoly that truly threatens competition. The FTC’s updated complaint is 80 pages long in an attempt to shore up what details of Facebook’s power may have been missing in the last round.
The lawsuit comes under the leadership of newly-confirmed chair Lina Khan, an academic critic of Big Tech and the youngest commissioner to be confirmed in the FTC’s history. She has received wide bipartisan support, including from popular conservative Big Tech critic, Senator Josh Hawley (R-MO), who said he was impressed with her work.
Hawley addressed the FTC in his book, The Tyranny of Big Tech. A fierce proponent of breaking up the monopolistic power of Big Tech, particularly through antitrust litigation such as the FTC is pursuing, Hawley also argues, however, that the FTC is largely ineffective and compromised. Currently, antitrust law enforcement is “awkwardly divided,” he says, between the DOJ and FTC. Hawley proposes that the DOJ take full control while the FTC should be “overhauled from top to bottom,” based on studies finding that “top FTC officials either were affiliated with Big Tech before they arrived or became lawyers or lobbyists for top tech companies after they left the agency…”.
However, Big Tech does not appear to be a fan of Khan. Facebook requested that she be recused from the case based on her history of Big Tech criticism. The Commission has denied the recusal.
In a statement to Gizmodo, Facebook accused the FTC of attempting to “rewrite antitrust laws and upend settled expectations of merger review” through its insistence on legal action against the company:
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. There was no valid claim that Facebook was a monopolist – and that has not changed. Our acquisitions of Instagram and WhatsApp were reviewed and cleared 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. We fight to win people’s time and attention every day, and we will continue vigorously defending our company.
Facebook must respond to the complaint by October 4.
“If the commission’s new lawsuit survives a likely motion by Facebook to dismiss the case,” writes WSJ, “a yearlong legal battle could ensue with broad ramifications for the tech giant’s future, and for the FTC’s powers to restrain dominant companies.”
You may also wish to read: Section 230: What is it and why the controversy? Does Section 230 provide Big Tech too much power, or is it necessary for the moderation of misinformation and inappropriate content? In its original form, Section 230 was a good idea. But its subsequent reforms have given Big Tech a “sweetheart deal” that protects them from accountability. (Caitlin Bassett)