A judge said the United States Federal Trade Commission had failed to establish that Facebook had a monopoly on social media.
Facebook Inc. won the dismissal of two antitrust cases filed by the federal government and a coalition of states when a judge dismissed the lawsuits. Shares of the social media platform increased.
U.S. District Judge James Boasberg in Washington on Monday granted Facebook’s request to dismiss the complaints, filed last year by the U.S. Federal Trade Commission and state attorneys general led by Letitia James of New York. .
The judge said the FTC had failed to meet the burden of establishing that Facebook had a monopoly on social media. He said the agency could resubmit the complaint within 30 days.
“While the court does not agree with all of Facebook’s assertions here, it ultimately agrees that the agency’s complaint is legally insufficient and should therefore be dismissed,” Boasberg wrote.
Facebook shares rose 4.4% in New York City following the decision.
With the move, Facebook escaped – at least for now – the most significant regulatory threat to its business to emerge from the broader crackdown on US tech giants.
The ruling is a blow to the FTC and states, which claimed Facebook violated antitrust laws by purchasing Instagram photo-sharing app and WhatsApp messaging service to eliminate emerging competitive threats and protect its monopoly.
It puts a new emphasis on the antitrust legislation put forward by the Judiciary Commission last week, which would make it easier for authorities to challenge anti-competitive behavior by the biggest tech platforms.
Boasberg’s decision to dismiss Facebook’s complaints shows the hurdles U.S. antitrust authorities face when trying to take on internet giants. Civil servants alone cannot dissolve businesses or impose other remedies, but must instead persuade judges to act. The process can take years.
The lawsuits against Facebook were filed in December as part of a growing crackdown on U.S. tech giants. The cases followed a Justice Department complaint against Alphabet Inc. for allegedly monopolizing internet search and the findings of a House investigation that accused tech companies of abusing their dominance. Lawmakers have since proposed a stack of bills that would cast a broad regulatory net on businesses.
Facebook’s lawsuits centered on the acquisition of Instagram in 2012 and the takeover of WhatsApp in 2014. Officials say Facebook made the deals because it viewed the two companies as threats to its business. Rather than competing with its own products, Facebook followed CEO Mark Zuckerberg’s mantra: “Better to buy than to compete,” according to the FTC complaint.
Facebook offered $ 1 billion for Instagram when it had just 25 million users and no income, but had already started to capture the mobile photo sharing market. Zuckerberg said the Instagram threat was “really scary,” according to the FTC’s complaint. The company paid $ 19 billion for WhatsApp because it saw messaging apps as another danger to its business. A Facebook executive said apps “could be the biggest threat we’ve ever faced as a business,” the FTC complaint said.
Facebook attacked the complaints on several grounds. One of its main arguments was that the FTC investigated the two acquisitions when they were announced and allowed the two transactions to continue. While antitrust authorities can challenge completed mergers, Facebook argued that the FTC’s case was unprecedented and the agency has never explained why its previous rulings approving the purchases were wrong. The government just wants a “remake,” Facebook said.
The company also argued that a U.S. Supreme Court ruling in April, which limited the FTC’s power to recover money for defrauded consumers, required the complaint to be dismissed.
The case is Federal Trade Commission v. Facebook Inc. 20-cv-3590, US District Court, District of Columbia (Washington).