In a major relief for Facebook, a U.S. federal court has dismissed the antitrust case filed against the social media company for allegedly using anticompetitive tactics and exercising a monopoly. Filed in December of last year, the FTC lawsuit sought a divestiture that would see the unwinding of Facebook’s purchase of Instagram and WhatsApp. Aside from alleging Facebook of using its deep pockets to stifle competition by purchasing budding rivals, the company was also accused of forcing its policies on developers.
The latter refers to Facebook’s API distribution system, which is said to have allowed interoperability only on the condition that their product doesn’t compete with Facebook itself. Of course, the company rejected the FTC’s allegations of ‘unlawful conduct’ with its own lengthy blog post and hit back at the agency for setting a bad precedent for businesses — sending a message that a deal is actually never over, even if the FTC cleared it years ago.
This week, U.S. District Judge James E. Boasberg dismissed the complaint, alongside a parallel lawsuit filed by a coalition of over 40 states at the same time, according to CNBC. The federal court noted that the FTC was unable to back up its claims of Facebook exercising monopolistic power with actual numbers. Additionally, the agency failed to provide a convincing argument that Facebook’s decision to block interoperability was illegal.
Relief For Facebook, But Troubles Aren’t Over
The U.S. FTC argued that Facebook maintains a share of over 60-percent in the PSN (Personal Social Network Services) market, but failed to provide actual market data to back those claims. The court ruling mentions that the FTC did not furnish any stats that could offer an idea of the “actual figure or range for Facebook’s market share” at any point in the past decade. This failure to furnish any credible data that could establish Facebook’s dominant market share weakens the argument that the Mark Zuckerberg-led company wields monopolistic power.
Additionally, the court argued that the money earned by a PSN service cannot be used as a metric for measuring market share as it encompasses a much larger geography than just the U.S. market. This makes it even more difficult to understand what the ‘over 60-percent’ market share cited by the FTC actually refers to. Coming to the part where Facebook has been accused of using its API rules to violate antitrust policies, the FTC again failed to substantiate those claims. The court notes that revoking API access to a select few names might invite punitive action, but blocking API distribution in its entirety to rivals does not classify as a violation of antitrust rules. Just like Facebook, Apple is also under the antitrust scanner in Europe where it has been accused of violating competition laws.
However, the troubles are not really over for Facebook. The U.S. federal court has only dismissed the complaint, but not the entire case. In fact, the court has given an interval of 30 days to submit an updated complaint in which the FTC can back its claims with actual figures. What this means is another Facebook versus FTC legal showdown cannot be ruled out in July. Not to mention, that’s not the only worry for the social media titan, which now has a market value of over $1 trillion.
Earlier this month, a bipartisan group of House lawmakers proposed five antitrust legislation bills aimed at tightening the control over Big Tech, specifically targeting Amazon, Apple, Google, and Facebook. The proposals could impact on everything from Amazon’s ecommerce dominance to the online advertisement of in-house products and acquiring nascent rivals to name a few. The bills are contentious, but if they are passed, Facebook and its multi-billion acquisitions of Instagram and WhatsApp could once again fall under intense scrutiny
