Judge Lets FTC Proceed With Antitrust Lawsuit Against Facebook

c-title pmc-u-font-size-20 pmc-u-font-size-38@tablet pmc-u-font-size-46@desktop-xl u-text-align-center@mobile-max u-letter-spacing-0025 pmc-u-line-height-normal u-line-height-45@tablet pmc-u-padding-t-1 pmc-u-padding-t-050@mobile-max”>Judge Lets FTC Proceed With Antitrust Lawsuit Against Facebook

By Ted Johnson

Ted Johnson

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January 11, 2022 3:51pm

(Photo by Artur Widak/NurPhoto via AP)

A federal judge will allow an antitrust lawsuit brought by the federal government against Facebook to move forward, concluding that the Federal Trade Commission met the threshold for putting forward a valid claim of the platform’s anticompetitive conduct.

The ruling (read it here) by U.S. District Judge James Boasberg was a bit of a surprise, as last summer he tossed out the FTC’s lawsuit, calling it “legally insufficient.” But the FTC filed an amended lawsuit in August, and Boasberg wrote that it “has now cleared the pleading bar and may proceed to discovery.”

The lawsuit is one of a number of actions facing Facebook and other major tech platforms, as federal agencies and lawmakers vow to try to rein in their power. The Senate Judiciary Committee is expected to vote later this month on bipartisan antitrust legislation aimed at preventing tech giants from giving preference to their own products or engage in conduct that disadvantages rivals.

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Boasberg wrote that the FTC’s new complaint contained more robust facts in backing up its claim that Facebook has monopoly power and “has willfully maintained that power through anticompetitive conduct — specifically, the acquisitions of Instagram and WhatsApp.”

The judge signaled the challenge that the FTC will face in proving its case, as antitrust lawsuits have typically been focused on the potential harm to consumers. Facebook, Instagram and WhatsApp are free to use, but Boasberg noted that the government alleges a “decrease in service quality, lack of innovation, decreased privacy and data protection, excessive advertisements and decreased choice and control with regard to ads, and a general lack of consumer choice in the market for such services.”

“Ultimately, whether the FTC will be able to prove its case and prevail at summary judgment and trial is anyone’s guess,” the judge wrote. “The Court declines to engage in such speculation and simply concludes that at this motion-to-dismiss stage, where the FTC’s allegations are treated as true, the agency has stated a plausible claim for relief under Section 2 of the Sherman Act.”

In June, Boasberg also tossed out a lawsuit brought by 48 state attorneys general, concluding that they waited too long to filed their case. The FTC lawsuit also was filed around the same time, December, 2020, during the final months of Donald Trump’s administration.

Facebook also sought to dismiss the latest complaint on the grounds that the current chairwoman of the FTC, Lina Khan, who was appointed by President Joe Biden, should have recused herself on the commission’s vote to authorize a new complaint against the tech giant. Khan previously worked as counsel to the House Judiciary’s antitrust subcommittee on its investigative report concluding that Facebook and other tech platforms had monopoly power.

But Boasberg wrote that Khan was acting in a prosecutorial capacity, not that of a judge, in deciding whether the proceed with the lawsuit.

“There is no indication that Chair Khan’s decision to seek reinstatement of the FTC’s suit against Facebook was based on anything other than her belief in the validity of the allegations,” he wrote. “Such behavior does not necessitate recusal.”

Amazon also has argued that Khan should recuse herself in matters involving their company. The FTC is currently reviewing Amazon’s proposed purchase of FTC, but the agency has declined to comment on the process.

Boasberg did reject the FTC’s claims about Facebook’s interoperability policies, which the company abandoned in 2018. Those policies have to do with how the platform restricts access to data, including from rivals.

A Facebook spokesperson said, “Today’s decision narrows the scope of the FTC’s case by rejecting claims about our platform policies. It also acknowledges that the agency faces a ‘tall task’ proving its case regarding two acquisitions it cleared years ago. We’re confident the evidence will reveal the fundamental weakness of the claims. Our investments in Instagram and WhatsApp transformed them into what they are today. They have been good for competition, and good for the people and businesses that choose to use our products.”

Holly Vedova, director of the FTC’s Bureau of Competition, said in a statement, “FTC staff presented a strong amended complaint, and we look forward to trial.”

 

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