Appeals Court Dismisses Lawsuit To Break Up Meta

Image credit: Meta

US Federal Appeals court dismisses antitrust attempt by US states to breakup Facebook parent Meta Platforms

Meta Platforms has been handed an important victory against American regulators seeking to breakup the social networking giant.

Last week CNN reported that a three-judge panel of the US Court of Appeals for the DC Circuit had upheld a lower-court decision that had tossed out the antitrust lawsuit, initially filed by New York and dozens of other US states.

It was back in December 2020 when Facebook had first faced a significant threat to its continued existence as a complete entity.

Antitrust lawsuit

Meta was 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 stifling competition.

It faced a significant risk of having to divest itself of its 2012 Instagram and 2014 WhatsApp acquisitions.

The US states alleged that for almost a decade,Facebook had monopoly power in the personal social networking market in the United States.

They also alleged Facebook illegally maintained that monopoly power by deploying a buy-or-bury strategy that thwarted competition and harmed both users and advertisers.

Even one of Facebook’s co-founders (Chris Hughes) had back in 2019 called for the breakup of the Facebook, saying that the firm he helped create was now a threat to democracy and that CEO Mark Zuckerberg welded too much power.

Court ruling

But CNN reported that the antitrust lawsuit from the US states has been defeated, after the federal appeals court ruled last week that the US states were years too late to file their challenge and failed to make a persuasive case that the company’s data policies harmed competition.

And the ruling does not bode well for the chances of the parallel antitrust case against Meta that was brought by the Federal Trade Commission.

The US states breakup attempt of Meta had suffered its first significant setback in June 2021, when a federal judge dismissed the complaint, saying that the lawsuit came long after the acquisitions had been completed in 2012 and 2014.

And last week the US appeals court agreed with this ruling.

“An injunction breaking up Facebook, ordering it to divest itself of Instagram and WhatsApp under court supervision, would have severe consequences, consequences that would not have existed ifNN as writing, Senior Circuit Judge Raymond Randolph was quoted as writing.

In addition, Randolph wrote, state allegations claiming that Meta’s policies placing restrictions on app developers were anticompetitive didn’t hold up.

The policies in question, Randolph wrote, simply told app developers they could not use Facebook’s platform “to duplicate Facebook’s core products,” and did not rise to the level of an antitrust violation under federal law.

Although the states argued that Facebook’s policies at the time – which have since been removed – discouraged innovation by the company’s rivals, the complaint failed to establish how widely the policies affected Facebook’s third-party developers.

“The States thus have not adequately alleged that this policy substantially foreclosed Facebook’s competitors, giving us an additional reason to reject their exclusive dealing theory,” the court held.

A spokesperson for New York Attorney General Letitia James didn’t immediately respond to a request for comment, CNN reported.

Meta response

In a statement, Meta said the state’s case reflected a mischaracterisation of “the vibrant competitive ecosystem in which we operate.”

“In affirming the dismissal of this case, the court noted that this enforcement action was ‘odd’ because we compete in an industry that is experiencing ‘rapid growth and innovation with no end in sight,’ Meta was quoted as saying.

“Moving forward, Meta will defend itself vigorously against the FTC’s distortion of antitrust laws and attacks on an American success story that are contrary to the interests of people and businesses who value our services.”

Meta of course still faces a similar lawsuit from the FTC (which was forced to amended the lawsuit), which also seeks to break up the acquisitions of Instagram and WhatsApp.