Size of the text
Getty Images/Alexander Koerner
In a landmark judicial victory for the plaintiffs,
Facebook,
A federal judge rejected identical antitrust complaints filed by the Federal Trade Commission and a group of 48 state attorneys general against the company. Last December, the Federal Trade Commission charged Facebook with “illegally maintaining its personal social networking monopoly through a years-long course of anticompetitive activity.” Facebook had a “systematic approach” to maintain monopoly power, according to the complaint, which included the purchases of Instagram in 2012 and WhatsApp in 2014. The FTC’s recommended remedies included ordering Instagram and WhatsApp to divest, as well as requiring Facebook to seek prior notification for any future deals.
However, Judge James Boasberg of the United States District Court for the District of Columbia dismissed the FTC’s as well as the states’ claims. He states in his conclusion, “Although the Court does not agree with all of Facebook’s contentions here, it ultimately concurs that the [FTC’s] complaint is legally insufficient and must thus be dismissed.” “The FTC has failed to present sufficient evidence to plausibly prove a crucial element of all of its… claims—namely, that Facebook has monopoly power.” In a statement, a Facebook representative stated, “We are delighted that today’s verdicts highlight the flaws in the government allegations filed against Facebook.” “Every day, we compete fairly for people’s time and attention, and we will continue to provide excellent service to the people and businesses who utilize our services.”
also see
On the news, Facebook shares rose 4.2 percent to $355.64, putting the company’s market value over $1 trillion for the first time.
Apple
(AAPL),
Microsoft
(MSFT), as well as
Amazon
(AMZN) all increased by approximately 1%, while Google-parent
Alphabet
(GOOGL) remained virtually unchanged. The case, according to Judge Boasberg, who was appointed to the district court by President Barack Obama in 2011, makes the “naked accusation” that Facebook has a market dominance of more than 60%. He calls the notion “unsupported” and points out that it would be difficult to quantify without revenue, units sold, or other common metrics. He says, “The FTC’s unwillingness to provide any indication of the metric(s) or method(s) it employed to compute Facebook’s market share renders its ambiguous ’60 percent -plus’ statement too speculative and conclusory to move ahead.” The court left the door open for the FTC to file an amended complaint because he dismissed the complaint but not the case. In his decision, the judge also dismissed the notion that Facebook’s policy of refusing to allow interoperability with other services is illegal. ” Even if the FTC had adequately proven market power, its challenge to Facebook’s strategy of withholding interoperability permissions with other apps does not state a claim for injunctive relief,” he argues. “In general, there is nothing illegal about establishing such a policy.” The court did, however, leave the possibility of reconsidering the Instagram and WhatsApp agreements open. “The FTC is on firmer basis in evaluating the Instagram and WhatsApp acquisitions, as the Court rejects Facebook’s contention that the FTC lacks authority to seek injunctive remedies against those acquisitions,” he writes. “How the Government intends to proceed will determine whether other concerns arise in a subsequent phase of litigation.” Eric J. Savitz can be reached at eric.savitz@barrons.com.
Continue reading
