NEWS20 August 2021

FTC refiles Facebook antitrust case

Legal News North America Privacy Public Sector

US – The Federal Trade Commission (FTC) has refiled its antitrust case against Facebook, claiming the social media company has “unlawfully acquired innovative competitors” to build a monopoly in the industry.

Facebook on phone

Facebook is the world’s largest social media company, and owns brands such as Instagram and WhatsApp as well as its eponymous social platform.

The new case follows the collapse of a previous antitrust case in June 2021, after the US District Court of the District of Columbia determined that the FTC had failed to demonstrate that Facebook was a monopoly.

The FTC and a number of US states had brought the original case against Facebook in December 2020, and defeat for the social media company could have required Facebook to divest assets including Instagram and WhatsApp.

The amended complaint, which was filed this week, has added further evidence to support the FTC’s claims against Facebook.

The FTC said in its statement that it believed that Facebook had resorted to an “illegal buy-or-bury scheme to maintain its dominance” after failing to develop mobile features for its network that could compete with its rivals.

The claim states: “In navigating its own transition from small start-up to business behemoth, Facebook’s leadership came to the realisation – after several expensive failures – that it lacked the business talent required to maintain its dominance amid changing conditions.

“Unable to maintain its monopoly by fairly competing, the company’s executives addressed the existential threat by buying up new innovators that were succeeding where Facebook failed.

“The company supplemented this anticompetitive spending spree with an opened-first-closed-later scheme that helped cement its monopoly by further thwarting nascent rivals.”

The FTC also claims that Facebook provided access to valuable Facebook platform interconnections to app developers or websites that stayed loyal to the company and agreed to its application programming interface (API) rules.

In contrast, the FTC said that app developers that were deemed potential competitive threats to Facebook lost access to those interconnections, forcing some out of business.

The consequence of these policies, according to the FTC, was a social media monopoly that has been able to impose a surveillance-based advertising model on its users.

Facebook has until 4th October to respond to the FTC complaint.

Holly Vedova, acting director at the FTC bureau of competition, said: “Facebook’s actions have suppressed innovation and product quality improvements. And they have degraded the social network experience, subjecting users to lower levels of privacy and data protections and more intrusive ads.

“The FTC’s action today seeks to put an end to this illegal activity and restore competition for the benefit of Americans and honest businesses alike.”

A spokesperson for Facebook said: “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.”