Self-proclaimed trustbusters have not had a good week.
The Federal Trade Commission’s (FTC) much-publicized lawsuit calling for the break-up of Facebook was thrown out, as was the antitrust suit filed by New York and 45 other states. For consumers, the dismissal of both lawsuits is a positive, albeit temporary, step in the right direction of ensuring consumers can continue benefiting from products and services tech platforms provide and preventing government agencies from recklessly cracking down on tech platforms.
Back in December 2020, the FTC sued Facebook for alleged illegal monopolization. In their initial suit, the agency claimed that throughout the company’s history, Facebook had engaged in “anticompetitive conduct with the aim of suppressing, neutralizing, and deterring serious competitive threats.” Of particular interest to the FTC was Facebook’s acquisition of Instagram in 2012 and WhatsApp in 2014.
Both acquisitions, the FTC claimed, were designed to “squelch” competitive threats. As a result of its anticompetitive behavior and acquisitions, the FTC argued Facebook had illegally “maintained its monopoly position.”
State attorneys general made a similar argument, claiming that Facebook developed a “bury-or-buy strategy” that “thwarts competition.” Additionally, the state attorneys general claimed Facebook’s strategy had eliminated, suppressed, and deterred “the emergence and growth of personal social networking rivals.”
In dismissing the case against Facebook, Judge James E. Boasberg wrote, “the complaint is undoubtedly light on specific factual allegations” and that the FTC’s arguments were “legally insufficient.” Judge Boasberg focused specifically on the fact the FTC had provided nothing more than a “naked allegation” that Facebook held a dominant share of the social media market.
While Judge Boasberg dismissed the complaint, he did not dismiss the case, meaning further legal action could be brought by the FTC. Additionally, Judge Boasberg allowed the FTC to file an “amended complaint within thirty days,” giving the agency, now headed by Lina Kahn, the opportunity to bring a new suit against the tech giant.
The case brought by 46 states against Facebook was dismissed “in its entirety” because the plaintiffs “waited six to eight years” to file the lawsuit, despite “the four-year guideline statute of limitations, to challenge…acquisitions.” Judge Boasberg also noted that the states had failed to provide sufficient reasoning for the delay.
Responding to the dismissal of New York’s lawsuit, Attorney General Letitia James’ spokesman stated they “are reviewing this decision and considering legal options.” Despite the dismissal, the matter may not be over, and further cases could be brought against Facebook or other tech platforms.
For consumers, the dismissal of the FTC’s complaint and the full dismissal of New York’s case is good news. While neither dismissal referenced the numerous consumer benefits Facebook provides to its consumers or the benefits its acquisitions of WhatsApp and Instagram granted, it does show that federal agencies cannot simply lean into the notion that the existence of big corporations is bad.
Instead, the decision to dismiss shows that to win these overly complex suits, the FTC and state attorney’s general must show more than just market share to prove anticompetitive or anti-consumer harm. It also leaves open the possibility that antitrust enforcers must pay more attention to consumer welfare in the future.
Denying New York’s suit because of the six to eight-year time difference sends a clear message to elected officials, namely, they cannot simply launch antitrust suits because it is politically popular. It should come as no surprise that 46 elected officials launched their suit just months after a Pew Research opinion poll found that 72% of American adults believed “social media companies have too much power and influence in politics.”
One real concern after the dismissal of the FTC’s complaint and dismissal of New York’s case is that Congress will find additional impetus to pass the numerous antitrust reform bills that have been filed this year. Of significant concern are the six bills recently marked up by the House Judiciary Committee recently marked up would codify “big is bad” into America’s antitrust laws.
For consumers, the decision to dismiss the FTC’s complaint against Facebook and entirely dismissing New York’s case should be welcome news. While Lina Kahn may authorize another suit, especially given her well-publicized hostility towards big tech, the dismissal shows that antitrust enforcers have to take a considerably more nuanced view than simply pointing to market share. Additionally, the ruling should send a clear warning to elected officials that it is inappropriate to weaponize antitrust laws for political gain.
The best-case scenario for consumers is that federal and state antitrust enforcers move on.