US revives Facebook lawsuit, adding details to monopoly claim

WASHINGTON — The Federal Trade Commission took aim at Facebook again on Thursday, bolstering its accusations that the company was a monopoly that illegally crushed competition, in an effort to overcome skepticism from a federal judge who dismissed the company’s original case. agency two months ago. .

The lawsuit filed Thursday contains the same general arguments as the original, claiming that Facebook’s acquisitions of Instagram and WhatsApp were made to drive a “rift” around its social media monopoly and arguing that the network social should be dismantled. But the updated lawsuit is almost twice as long and includes more facts and analysis that the agency says better support the government’s claims.

“Facebook lacked the business acumen and technical talent to survive the transition to mobile,” Holly Vedova, acting director of the agency’s competition office, said in a statement. “After failing to compete with new innovators, Facebook illegally bought or buried them when their popularity became an existential threat.”

Facebook replied: “There was no valid assertion that Facebook was a monopoly – and that hasn’t changed. Our acquisitions of Instagram and WhatsApp were reviewed and cleared many years ago, and our platform policies were legal.

The agency had to refile the case after the judge overseeing it said in June that the government had failed to provide enough evidence that Facebook was a social media monopoly. The judge’s decision, and a similar ruling he made in a case against the company brought by more than 40 states, dealt a blow to regulators’ attempts to rein in Big Tech.

Her decision presented the first major test for Lina Khan, the chairwoman of the FTC, who only had a few days in her role at the time. Ms Khan represents a wave of new thinking about the industry among administration officials and many lawmakers, saying the government needs to take much more aggressive action to stem the power of tech giants like Facebook, Google, Amazon and Apple. President Biden has appointed several regulators with similar goals, and lawmakers have proposed updates to antitrust laws to target the power of tech companies.

Criticisms of the first version of the Facebook case by District Court Judge James E. Boasberg of the District of Columbia showed the daunting challenges faced by regulators. Although companies dominate the markets they are in — social media, in the case of Facebook — courts often consider whether prices are rising as an indication of monopolization. Facebook’s most popular services are free.

“No one who hears the title of the 2010 film ‘The Social Network’ wonders what company it is,” Judge Boasberg wrote. “Yet whatever that may mean to the public, ‘monopoly power‘ is a technical term under federal law with definite economic meaning.” He asked the FTC to substantiate claims that Facebook controls 60% of the “personal social networking” market and blocks competition.

Ms Khan was then faced with a choice on how to handle Judge Boasberg’s decision. One option was to drop the case altogether, while another was to expand it with even broader charges. Instead, she took more of a middle ground, resubmitting the lawsuit with more details and a broader narrative of the company and what the agency says is a pattern of anti-competitive behavior since that Mark Zuckerberg co-founded at Harvard in 2004.

The revised lawsuit was approved by the committee by a 3-2 vote, with the three Democrats on the committee voting in favor and the two Republican members dissenting.

In the new complaint, the FTC provides more details to support the government’s claims that Facebook has a social media monopoly. But the public version of the lawsuit had many statistics redacted because the numbers are exclusive.

The agency said Facebook – the company’s biggest service, known within the company as Facebook Blue – and Instagram were the top social networks in the US, far ahead of its next biggest competitor. , Snapchat.

The agency refuted Facebook’s claims that it has many competitors in social media, instant messaging and entertainment. The agency argued that Facebook’s products were intended for “personal social networks”, distinguishing them from specialized social networks like the professional network LinkedIn or the neighborhood site NextDoor. The FTC added that Facebook’s products are also different from messaging services like Signal and iMessage because users don’t typically use these services to send notes to large groups or find contacts.

And the agency said Facebook differed from Twitter, YouTube and TikTok because the content on those sites was generally created for the public and not aimed at specific individuals on a social network.

“Facebook today holds, and has maintained since 2011, a dominant share of the relevant market for personal social networking services in the United States, measured using several metrics: time spent, daily active users, and monthly active users,” the agency said in its complaint. .

The FTC’s main argument is that Facebook has attempted to maintain a social media monopoly through its acquisitions of Instagram in 2012 and WhatsApp in 2014. “Facebook in the new mobile environment,” the agency said in its statement. complaint.

The lawsuit also says that beginning in 2010, the company stifled competitors such as Circle, a social network, and Vine, a short-form video platform, by adding new limits on how outside developers Facebook-connected products might work with other social networks.

“Facebook defeated its competitors not by improving its own product, but rather by imposing anti-competitive restrictions on developers,” according to the lawsuit.

Facebook slammed the arguments as a revisionist story, noting that the FTC reviewed mergers with Instagram and WhatsApp and did not block the deals.

“The FTC’s claims are an effort to rewrite antitrust laws and upend established expectations about merger review, telling the business community that no sale is ever final,” Facebook said Thursday.

The company has until Oct. 4 to respond to the new complaint or ask Mr. Boasberg to dismiss the case. Last month, he filed a motion for Ms Khan to recuse herself from the agency’s record, saying her work on a House inquiry into platform monopolies showed bias against the company. The FTC on Thursday said it had denied that motion, saying Facebook would receive “appropriate constitutional due process protections” as the case would go to trial in front of a federal judge.

Former FTC Chairman Bill Kovacic said the agency had done enough to “live to fight another day.”

“The judge said ‘show your work’ and it looks like they’ve done enough to accommodate that request,” he said.

But he warned the case would face a long and arduous challenge. The FTC has won fewer than 20 of its monopoly cases in appeals court since the agency was established more than 100 years ago, he said.

“Facebook will fight hard against this,” Kovacic added.

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