Throwing out a pair of lawsuits that were rolled out to great fanfare late last year, a federal judge found state and federal regulators offered little to support wide-ranging antitrust allegations brought against Facebook.
The Federal Trade Commission and a coalition of 48 attorneys general will have 30 days to refile their complaints.
In a 53-page ruling against the commission’s case, U.S. District Judge James Boasberg offers a sweeping history of social media and antitrust law.
“At the time of the last great antitrust battle in our courthouse — between the United States and Microsoft — Mark Zuckerberg was still in high school,” the first lines of the ruling begin. “Only after his arrival at Harvard did he launch ‘The Facebook’ from his dorm room. Nearly twenty years later, both federal and state regulators contend, in two separate actions before this Court, that Facebook is now the one violating the antitrust laws.”
An even lengthier ruling dismissing the suit brought by the state attorneys general adopts a similarly sweeping scope.
“As the pillars of our national economy have shifted from the concrete to the virtual, so too have the targets of government antitrust actions,” that ruling begins. “Where railroads and oil companies were alleged to be early violators, over the past decades, providers of telecommunications (AT&T) and computer operating systems (Microsoft) have been the defendants. In the internet age, not surprisingly, Facebook finds itself in the spotlight, as both federal and state regulators contend, in two separate actions before this Court, that it is now the one violating the antitrust laws.”
A spokesman for New York State Attorney General Letitia James did not immediately respond to an email requesting comment. Neither did a lawyer for Facebook.
In her lawsuit from December, James traced Facebook’s allegedly anticompetitive conduct back nearly a decade, as far back as its acquisition of Instagram in 2012.
Describing Facebook’s acquisition of WhatsApp and Instagram as part of a “buy or bury” mode of doing business, James and her fellow top prosecutors asked for a court order blocking the social media giant from any other buyouts worth more than $10 million.
For Boasberg, the allegations in the states’ suit extended too far back to be timely.
“The Court is aware of no case, and [the state AGs] provide none, where such a long delay in seeking such a consequential remedy has been countenanced in a case brought by a plaintiff other than the federal government, against which laches does not apply and to which the federal antitrust laws grant unique authority as sovereign law enforcer,” Boasberg wrote.
Federal regulators went farther, seeking to break up Facebook and divest its assets on the grounds that it enjoys monopoly power for personal social networking services — with more than 60 percent of the market.
Boasberg said he did not know how the federal government arrived at that number.
“Such an unsupported assertion might (barely) suffice in a Section 2 case involving a more traditional goods market, in which the Court could reasonably infer that market share was measured by revenue, units sold, or some other typical metric,” the ruling states. “But this case involves no ordinary or intuitive market. Rather, PSN services are free to use, and the exact metes and bounds of what even constitutes a PSN service — i.e., which features of a company’s mobile app or website are included in that definition and which are excluded — are hardly crystal clear.”
“In this unusual context, the FTC’s inability to offer any indication of the metric(s) or method(s) it used to calculate Facebook’s market share renders its vague ‘60%-plus’ assertion too speculative and conclusory to go forward,” the judge continued.
The Federal Trade Commission did not immediately respond to an email requesting comment. It is unclear whether state or federal regulators will accept the court’s invitation to revise and refile their complaints.
[Photo by Philippe LOPEZ / AFP]
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