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FTC Revives Monopoly Maintenance Claims Against Facebook

Posted  August 20, 2021
By Allison F. Sheedy

The FTC filed an amended complaint against Facebook yesterday, reviving its ongoing federal antitrust case against the leading online social network.

U.S. District Court Judge James Boasberg surprised many observers when he dismissed the FTC’s original complaint in June 2021 for failing to allege sufficient facts to support the agency’s allegation that Facebook had monopoly power in a relevant market.  The dismissal was unexpected as the federal antitrust agencies rarely face motions to dismiss and even more rarely lose them.

The FTC’s amended complaint again alleges that the social networking company has illegally maintained its monopoly in the market for personal social networking through a series of anticompetitive acquisitions, including Instagram and WhatsApp.  The legal case has received criticism from Republican Commissioners and some commentators because the FTC previously blessed the acquisitions the agency now alleges to be part of an anticompetitive scheme to suppress competition.

The amended complaint attempts to address with data and evidence what Judge Boasberg considered to be the claim’s critical flaw—the FTC’s failure to demonstrate Facebook’s dominant share of the relevant market through anything other than naked allegations.

In announcing its filing yesterday, the FTC asserted that its “amended complaint details how the monopolist survived existential threats by illegally acquiring innovative competitors and burying successful app developers.”  In an effort to beef up its allegations of Facebook’s dominance, the new pleading heavily relies on an analysis of data from Comscore, “a commercial data provider that directly observes the online behavior of large panels of internet users. . . and extrapolates industry statistics based on panel behavior and tagged traffic.”  See Amended Complaint  ¶ 195.  The FTC cites its analysis of Comscore data as supporting its conclusion that Facebook has operated “the dominant and largest personal social networking service in the United States since at least 2011.”  See Amended Complaint  ¶ 181.

In the interim between the District Court’s dismissal of the initial complaint and the filing of the amended complaint, President Biden named the recently appointed Commissioner Lina Khan to be Chairperson of the FTC, and Facebook sought to have her recused from any deliberations involving the company because of her alleged bias against co-called Big Tech companies.  Khan, however, participated in the 3-2 vote approving the filing of the amended complaint with apparently no opposition from FTC ethics counsel.

Cases involving single firm conduct have proven difficult for the FTC to win.  Whether or not the additional data and evidence supplied by the FTC will get the pleading past another motion to dismiss, this case will be a critical test of the agency’s resolve and ability under Khan’s leadership to challenge Big Tech.

Edited by Gary J. Malone

Tagged in: Antitrust Litigation,