Government Sharpens Antitrust Attack Against Facebook

A revised complaint alleged that the social network giant pursued a laser-focused strategy to “buy or bury" rivals.

Facebook logo at the Nasdaq MarketSite in Times Square, New York, March 29, 2018.
Facebook logo at the Nasdaq MarketSite in Times Square, New York, March 29, 2018.
AP Photo/Richard Drew, File

WASHINGTON (AP) — Federal regulators have sharpened their antitrust attack against Facebook, alleging in a revised complaint Thursday that the social network giant pursued a laser-focused strategy to “buy or bury" rivals to suppress competition.

It is the Federal Trade Commission's second antitrust run at the company. A federal judge in June dismissed antitrust lawsuits brought against Facebook by the agency and a broad coalition of state attorneys general that were among multiplying efforts by federal and state regulators to rein in tech titans’ market power.

The FTC again is seeking remedies that could include a forced spinoff of Facebook's popular Instagram and WhatsApp messaging services, or a restructuring of the company.

The agency's lawsuit last December alleged Facebook engaged in a “systematic strategy” to eliminate its competition, including by purchasing smaller up-and-coming rivals like Instagram in 2012 and WhatsApp in 2014.

Facebook said the FTC was attempting to revive a meritless lawsuit and said it will vigorously defend itself against what it said is an effort to rewrite antitrust laws.

“There was no valid claim that Facebook was a monopolist — and that has not changed," the company based in Menlo Park, California, said in a prepared statement. “Our acquisitions of Instagram and WhatsApp were reviewed and cleared many years ago, and our platform policies were lawful.”

The company has until Oct. 4 to formally respond.

The new FTC complaint lays out a detailed history of Facebook's conduct, particularly since the arrival of mobile devices like smartphones in the 2010s, and the rise of innovative rivals.

Paul Swanson, an antitrust litigator at law firm Holland & Hart in Denver, said the new complaint addresses the court’s concerns “head-on."

"Facebook will need new arguments to beat back the FTC’s case,” Swanson said.

Separately, the agency dismissed a request from Facebook that FTC Chair Lina Khan — an outspoken critic of Big Tech appointed in June by President Joe Biden — step aside in this case because of her past public statements. Facebook says Khan’s criticism of its market power when she was an academic and the legal director of an anti-monopoly think tank, and her more recent work on a congressional investigation, make it impossible for her to be impartial.

The FTC's general counsel's office reviewed the petition and dismissed the request on grounds that the company's due-process rights will be fully protected in the federal court proceeding.

Without Khan's vote, the FTC’s case against Facebook could have stalled by splitting the vote between the four other commissioners — two Democrats and two Republicans. The vote to file the amended complaint was 3-2, with the two Republicans voting against it.

Consumer advocates applauded the FTC's decision to refile the antitrust complaint against the social media company with nearly 3 billion global users that they have long accused of wielding monopoly power and undertaking anticompetitive acquisitions. Facebook's market value recently topped $1 trillion; its revenue last year reached about $85 billion.

"Facebook is one of the worst offenders, and it’s long past time for this company to be broken up,” Alex Harmon, competition policy advocate for Public Citizen, said in a statement.

Harmon and other advocates said, however, that the regulators need support from Congress to update antitrust laws that have been weakened and make cases like the FTC's against Facebook difficult.

An ambitious, bipartisan package of legislation to overhaul the antitrust laws, which could point toward breaking up Facebook as well as Google, Amazon and Apple, was approved by the House Judiciary Committee in June and sent to the full House.

U.S. District Judge James Boasberg ruled in June that the FTC's original lawsuit was “legally insufficient” and didn’t provide enough evidence to prove that Facebook was a monopoly. He dismissed the states’ separate complaint outright.

But his ruling only dismissed the FTC’s complaint but not the case, giving the agency a chance to file a revised complaint.

In the new filing, the FTC laid out a detailed analysis to substantiate its monopoly power claim.

“Direct evidence, including historical events and market realities" confirms the allegation, the complaint says. The harm to consumers from the lack of competition “is particularly severe," it says.

Some of the material meant to show dominant market share is redacted in the public version of the filing, including internal Facebook emails.

The agency made its case anew Thursday as Facebook, Google, Amazon and Apple fall under extreme scrutiny and legislative pressure from the FTC, the Justice Department, European regulators, lawmakers in Congress and state legislatures. Most recently, Biden last month issued a sweeping executive order to stanch anticompetitive conduct in U.S. industry, including a call for federal regulators to give closer scrutiny to mergers proposed by the tech giants.

Last October the Trump Justice Department, joined by about a dozen states, brought a landmark antitrust suit against Google, accusing the company of using its dominance in online search to stifle competition and innovation at the expense of consumers. As it stands, the case isn’t scheduled to go to trial in federal court for nearly three years.

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