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FTC files renewed antitrust complaint against Facebook

Image credit: REUTERS/Dado Ruvic/Illustration

The US competition watchdog has filed a fresh antitrust complaint against Facebook, its initial complaint having been dismissed for insufficient evidence by a federal judge in June.

US District Judge James Boasberg gave the Federal Trade Commission (FTC) an opportunity to amend its case against the social media giant, which was originally brought in December 2020. The FTC, chaired by Biden-nominated Lina Khan, voted 3-2 to bring the complaint.

In its first complaint, Boasberg said that the FTC had not defined a plausible market in which Facebook held a monopoly and suggested too vague a percentage of market share it controlled. He also said that the FTC did not have authority under its chosen statue to bring these particular antitrust charges against Facebook. He advised that the FTC could receive an injunction under that statue if a violation was in progress or about to occur.

While maintaining the same argument, the amended complaint is significantly longer and more detailed than its predecessor, having expanded from 53 to 80 pages.

It states that Facebook’s anticompetitive acquisitions of Instagram and WhatsApp were conducted with the aim of entrenching its monopoly power. It cites internal Facebook communications about potential acquisitions, including of Twitter and Snapchat, to demonstrate the company’s intent to eliminate competition.  

Holly Vedova, acting director of the FTC’s bureau of competition, said; “Facebook lacked the business acumen and technical talent to survive the transition to mobile. After failing to compete with new innovators, Facebook illegally bought or buried them when their popularity became an existential threat.”

It also states that “made a deliberate decision” to block rivals from accessing its API, sacrificing the benefit that the third-party apps would bring to Facebook in order to maintain its monopoly.

The complaint retains the previous definition of the monopolised market: “personal social networking services” which make use of personal social graphs to connect users. This definition excludes platforms intended for broadcasting user-generated content to a large audience, such as LinkedIn, Twitter, Reddit, YouTube, and TikTok. It states that the only significant extant competitor in this space is Snapchat.

The amended complaint puts forward the argument that Facebook’s unhindered success in the wake of the Cambridge Analytica scandal demonstrates the company’s unshakable hold on this market. The FTC wrote: “Facebook’s ability to harm users by decreasing product quality, without losing significant user engagement, indicates that Facebook has market power.” The FTC fined Facebook a record $5bn for its privacy violations following the scandal.

The FTC argues that Facebook share of this market has exceeded 65 per cent, citing time spent and active-user metrics as evidence of Facebook’s monopoly power: “Facebook has today, and has maintained since 2011, a dominant share of the relevant market for US personal social networking services,” the complaint states. It says that lack of serious competition has permitted Facebook to “hone a surveillance-based advertising model and impose ever-increasing burdens on its users”.

Facebook has been given until 4 October to produce a response to the complaint. A statement on its official Twitter account said: “There was no valid claim that Facebook was a monopolist – and that has not changed.”

Facebook has made an effort to undermine FTC Chair Khan’s neutrality. In July, it called on her to recuse herself from the complaint, based on her previous statements that Facebook has violated antitrust laws. The FTC rejected the proposal, stating: “As the case will be prosecuted before a federal judge, the appropriate constitutional due process protections will be provided to the company.”

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