FTC Amends Antitrust Complaint Against Facebook, After Setback

The Federal Trade Commission (FTC) is doubling down on its antitrust complaint against social networking giant Facebook.

In December Facebook was hit with two separate antitrust lawsuits from the 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 faces a risk of having to divest itself of Instagram and WhatsApp.

The FTC building in Washington, DC. Image credit: FTC

Original complaint

At the time the lawsuits were filed, Facebook slammed them and claimed the lawsuits were nothing other than ‘revisionist history’.

In March Facebook asked US District Judge James Boasberg in the District of Columbia to dismiss the antitrust lawsuits, when it argued the government had failed to show that Facebook had a monopoly in a clearly defined market, or that it had hurt consumers.

Facebook also responded separately to the lawsuit brought by dozens of states and territories.

The social networking giant argued that the state lawsuit should be dismissed because the states failed to show that they were harmed by Facebook and because they waited more than four years.

On 28 June Judge Boasberg dismissed the initial FTC complaint, when he ruled that the FTC failed to define a plausible market that Facebook monopolised and suggested too loose of a percentage of market share it owned.

Plus, he wrote, the FTC lacked authority under its chosen statute to bring charges against Facebook for how it implemented an old policy preventing rivals from accessing its platform seven years ago.

Judge Boasberg said in order for the FTC to receive an injunction under that statute it must be clear that a violation is in progress or about to occur.

However he gave the FTC the chance to amend its complaint.

Amended complaint

And now the FTC has announced an amended complaint that Facebook “resorted to illegal buy-or-bury scheme to crush competition after a string of failed attempts to innovate.”

“The complaint alleges that after repeated failed attempts to develop innovative mobile features for its network, Facebook instead resorted to an illegal buy-or-bury scheme to maintain its dominance,” said the FTC. “It unlawfully acquired innovative competitors with popular mobile features that succeeded where Facebook’s own offerings fell flat or fell apart.”

The FTC also alleged that Facebook “lured app developers to the platform, surveilled them for signs of success, and then buried them when they became competitive threats.”

The US regulator said “lacking serious competition, Facebook has been able to hone a surveillance-based advertising model and impose ever-increasing burdens on its users.”

“Facebook lacked the business acumen and technical talent to survive the transition to mobile,” said Holly Vedova, FTC Bureau of Competition Acting Director. “After failing to compete with new innovators, Facebook illegally bought or buried them when their popularity became an existential threat.”

“This conduct is no less anticompetitive than if Facebook had bribed emerging app competitors not to compete,” said Vedova. “The antitrust laws were enacted to prevent precisely this type of illegal activity by monopolists. Facebook’s actions have suppressed innovation and product quality improvements.”

“And they have degraded the social network experience, subjecting users to lower levels of privacy and data protections and more intrusive ads,” said Vedova. “The FTC’s action today seeks to put an end to this illegal activity and restore competition for the benefit of Americans and honest businesses alike.”

State lawsuit

The FTC also carefully reviewed Facebook’s petition to recuse Chair Lina M. Khan, due to her past critical statements of the industry

As the case will be prosecuted before a federal judge, the FTC dismissed the petition.

Facebook has until 4 October to respond to the amended FTC complaint.

But what of the US state complaint?

Judge Boasberg also in June had dismissed the similar lawsuit from a coalition of state attorneys general, and he declined to give them the same second chance he gave the FTC.

New York Attorney General Letitia James, who led the coalition, in June said they would consider their legal options.

James has since said the US states would seek to appeal the ruling.

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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