Federal Trade Commission Refiles Suit Accusing Facebook Of Illegal Monopoly

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The FTC accused Facebook of stifling competition when it bought rivals Instagram and WhatsApp and cut off other would-be rivals from its data.

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‘The Wrath Of Mark’: 4 Takeaways From The Government’s Case Against Facebook

It accused Facebook of buying up-and-coming rivals Instagram and WhatsApp to protect its dominance, and of luring other would-be competitors with access to its platform and data and then cutting them off when they became threats.

«After failing to compete with new innovators, Facebook illegally bought or buried them when their popularity became an existential threat, Holly Vedova, acting director of the FTC’s Bureau of Competition, said in a statement.

Facebook has until October 4th to respond, The company said on Twitter it was reviewing the amended complaint and «will have more to say soon.

The FTC first sued Facebook in December, in tandem with a separate lawsuit from 48 attorneys general making similar allegations that Facebook crushed competition.

But Judge James Boasberg of the U.S. District Court for the District of Columbia dismissed the FTC’s complaint in late June. He said the agency failed to give enough evidence for its argument that the company holds a monopoly in social networking. But he also gave the FTC 30 days to refile the suit, a deadline which the court later agreed to extend to August 19th.

The judge also dismissed the states’ case against Facebook, saying they had waited too long to challenge the purchases of Instagram in 2012 and WhatsApp in 2014. The states say they plan to appeal the ruling.

The FTC’s new complaint is nearly 30 pages longer than the original. It makes similar arguments about Facebook’s alleged anti-competitive strategy of buying up or blocking companies it perceived as potential threats, but also gives more backing for its claim that the social network is a monopolist, in an attempt to address the judge’s concerns.

Facebook «has been the dominant and largest personal social networking service in the United States since at least 2011, the complaint alleged. It cited data about how many people in the U.S. use Facebook and Instagram each month and how much time they spend on the apps. (The exact figures were redacted from the filing.)

It said Facebook’s share of U.S. internet users and the amount of time its users spend on its apps outstripped other social networks. «No other personal social networking provider in the United States remotely approaches Facebook’s scale, the suit said. Snapchat is the next closest, it argued, «but its users base pales in comparison with tens of millions fewer users a month than either Facebook or Instagram.

The FTC said Facebook’s market power is also evident in the fact that even when the company has gone through crises — such as the Cambridge Analytica scandal in which user data was harvested without people’s consent — «Facebook does not lose significant users or engagement to competitors.

Facebook’s outsized profits and trillion-dollar market cap are also evidence of its entrenched position, the complaint alleged.

Technology
New FTC Chair Lina Khan Wants To Redefine Monopoly Power For The Age Of Big Tech

The revived lawsuit opens the next chapter in Washington’s battle with big tech, which kicked off under President Trump and has accelerated during the Biden administration.

The FTC’s new chair, Lina Khan, is one of the most prominent voices calling for curbs on the dominance of big companies, especially the Silicon Valley giants that have gained so much power in recent years.

In Khan’s early weeks in the job, she has signaled a more aggressive approach toward potentially anti-competitive behavior — and has drawn criticism from the companies she’s tasked with regulating. Both Facebook and Amazon have petitioned the FTC for Khan to recuse herself from involvement in cases involving the companies, citing her previous criticism of them.

On Thursday, the FTC said its had «carefully reviewed Facebook’s recusal petition and dismissed it. «As the case will be prosecuted before a federal judge, the appropriate constitutional due process protections will be provided to the company, the agency said.

The five FTC commissioners voted 3-2 along party lines to bring the complaint against Facebook, with Khan joining the two other Democrats in support.

Editor’s note: Facebook is among NPR’s financial supporters.