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  • Writer's pictureEdward Lehman

Will Antitrust Suits Ever Work Against U.S. Social Media Sites?

In a significant legal win for Facebook, last week a U.S. District Court judge dismissed parallel antitrust complaints against the company that had been filed by the Federal Trade Commission and a group of 48 state attorneys general.

The dismissal was the first big blow to state and federal lawsuits against United States technology firms last year seeking to rein in alleged abuses of their massive market power.

The court ruled that the FTC failed to prove its main contention and the cornerstone of the case: that Facebook holds monopoly power in the U.S. personal social networking market.

“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,” reads the filing from the U.S. District Court for the District of Columbia. “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.”

The court continued, stating, “The FTC’s Complaint says almost nothing concrete on the key question of how much power Facebook actually had, and still has, in a properly defined antitrust product market. It is almost as if the agency expects the Court to simply nod to the conventional wisdom that Facebook is a monopolist.”

The ruling is not necessarily the end of the case. The court acknowledged that the FTC may be able to cure the weaknesses in its argument, so it left open the possibility that it could file an amended complaint and continue the litigation.

The FTC has 30 days to file an amended complaint with more details to bolster its case.

The U.S. District Court for the District of Columbia also dismissed a lawsuit by multiple U.S. states, saying the states waited too long to challenge the acquisitions of Instagram and WhatsApp in 2012 and 2014, respectively. The judge did not invite the states to refile their complaint.

The decision was a resounding blow to mounting efforts in Washington D.C. to undercut the power of technology giants and underscored the difficulties regulators have reining in some of the most profitable businesses in the world.

Previously, congressional investigators had been looking into whether U.S. technology companies had been engaging in anti-competitive, monopoly-style tactics.

In a report that capped a 16-month investigation, the U.S. House of Representative’s top antitrust panel determined in 2020 that Facebook “has monopoly power in the market for social networking.” The determination did not assign Facebook a direct market share figure, but rather relied on a combination of interviews with Facebook executives, outside reports from mobile app tracking firms, Facebook statements and company internal documents. In one 2012 internal document, Facebook said it controlled “95 percent of all social media.”

In the report, congressional investigators faulted Facebook for gobbling up potential competitors with impunity and concluded Google improperly scraped rivals’ Web sites and forced its technology on others to reach its pole position in search and advertising.

The report concluded Amazon and Apple exerted their own form of “monopoly power” to protect and grow their corporate footprints. As operators of two major online marketplaces — a world-leading shopping site for Amazon, and a powerful APP Store for Apple — the two tech giants for years set rules that essentially put smaller, competing sellers and software developers at a disadvantage, the report found.

The judge in the most recent case brought about by the FTC against Facebook noted that none of that detail had been included in the FTC complaint. “The FTC’s Complaint says almost nothing concrete on the key question of how much power Facebook actually had, and still has, in a properly defined antitrust product market."

The previous report from the House proposed a sweeping overhaul of U.S. antitrust law, a series of legislative proposals to empower the government to battle bigness in the tech industry and prevent future problematic mergers. Though, any such changes would require legislative approval from Congress.

AmChamUS supports legislative measures — whether actively pursued by either the House or Senate, or as an extension of judicial decisions — that foster healthy competition in markets around the country, which contribute to economic development and job creation.

AmChamUS does not support larger corporations taking coercive actions against small and medium sized U.S. companies — the backbones of the U.S. economy — that ultimately harm such businesses.

AmChamUS will continue to work with federal legislators to ensure any legislative or judicial measure is rooted in fact and has supporting evidence. AmChamUS does not believe in arbitrarily attacking U.S. businesses, which send the wrong signals to the economy, and distort the ability for federal agencies to take proper corrective actions later.

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