Facebook Joins Trillion Dollar Club, As FTC Complaint Dismissed

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Social network Facebook wins dismissal of US states and FTC antitrust lawsuit, which triggers share rise above $1 trillion

Facebook has joined the exclusive trillion dollar club, after winning a significant legal victory against antitrust charges.

In December Facebook had been hit with two separate antitrust lawsuits from the Federal Trade Commission (FTC) and a coalition of attorneys general from 48 states and territories.

Facebook was accused of alleged anti-competitive conduct by buying up rivals and stifle competition, and faced a risk of having to divest itself of Instagram and WhatsApp.

Facebook IPO © lev radin, Shutterstock 2012

Facebook charged

Facebook at the time slammed both lawsuits, claiming the lawsuits filed by the FTC and the US State Attorneys General was ‘revisionist history’.

It continued to contest the lawsuits, and in March Facebook asked US District Judge James Boasberg in the District of Columbia to dismiss the antitrust lawsuits.

In April however, the FTC and the large group of US states asked a federal court not to grant Facebook’s request to dismiss their antitrust lawsuits.

But now two months later a federal court on Monday dismissed the Federal Trade Commission’s antitrust complaint against Facebook, as well as a parallel case brought by 48 state attorneys general, CNBC reported.

Court ruling

However, the court ruled on Monday that the FTC failed to prove its main contention and the cornerstone of the case: namely that Facebook holds monopoly power in the US personal social networking market.

“Although the Court does not agree with all of Facebook’s contentions here, it ultimately concurs that the agency’s Complaint is legally insufficient and must therefore be dismissed,” the filing states. “The FTC has failed to plead enough facts to plausibly establish a necessary element of all of its Section 2 claims – namely, that Facebook has monopoly power in the market for Personal Social Networking (PSN) Services.”

The court found the FTC did not provide enough detailed data to prove Facebook has market power in the loosely defined market for personal social networking services.

“The Complaint is undoubtedly light on specific factual allegations regarding consumer-switching preferences,” the court wrote. “These allegations – which do not even provide an estimated actual figure or range for Facebook’s market share at any point over the past ten years – ultimately fall short of plausibly establishing that Facebook holds market power.”

The filing also noted that the FTC’s complaint seemed to assume that the court would agree Facebook is a monopoly.

“The FTC’s Complaint says almost nothing concrete on the key question of how much power Facebook actually had, and still has, in a properly defined antitrust product market,” the filing reads. “It is almost as if the agency expects the Court to simply nod to the conventional wisdom that Facebook is a monopolist.”

Ruling Reaction

The ruling has triggered reactions from both Facebook and the FTC.

“We are pleased that today’s decisions recognise the defects in the government complaints against Facebook,” the company was quoted by CNBC as saying in a statement. “We compete fairly every day to earn people’s time and attention and will continue to deliver great products for the people and businesses that use our services.”

“The FTC is closely reviewing the opinion and assessing the best option forward,” a spokesperson for the FTC reportedly.

“We are reviewing this decision and considering our legal options,” a spokesman for the office of New York Attorney General Letitia James reportedly said.

It should be noted that the case make not end here.

The court acknowledged that the FTC may be able to address the weaknesses in its argument, so it left open the possibility that the federal watchdog could file an amended complaint and continue the litigation.

Trillion dollars

But the court ruling has a positive impact on Facebook’s market value, after it shares rose 4 percent on the back of the decision.

The Facebook share price rise pushed the social networking giant into the exclusive trillion dollar club, with its market capitalisation rising to $1.008 trillion for the first time.

It joins the likes of Google and Amazon above the $1 trillion mark.

Amazon’s market cap is around $1.77 trillion, and Google parent Alphabet’s is $1.67 trillion.

Apple and Microsoft meanwhile are already in the even more exclusive $2 trillion club.

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Author: Tom Jowitt
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