A federal judge decided on Monday to dismiss both the FTC’s lawsuit and a separate lawsuit brought forward by a coalition of state attorney generals to break up Facebook.
Both 48 state attorneys general (led by Letitia James of New York) and the FTC filed separate lawsuits last year alleging Facebook's market share crushed competition. In buying Instagram for $1 billion in 2012 and WhatsApp for $19 billion in 2014, the suits claimed Facebook had cornered the market.
(Link for the dismissal of the FTC complaint)
(Link for the dismissal of the state’s lawsuit)
Federal Judge James E. Boasberg of the U.S. District Court for Washington DC said "too much time had elapsed since the alleged offenses took place."
Former FTC chairman William E. Kovacich told The New York Times: “This is a reminder to those who have wanted a dramatic sweeping litigation campaign to take on Big Tech that there’s nothing easy about it, because the courts have a different view of the antitrust system.”
While the theme of time is prevalent in both dismissals, CNBC points out a distinction between the two. The court said the FTC can still proceed as long as they make an argument about the need for “divestiture” of Facebook’s acquisitions of both Instagram and WhatsApp.
The fact that the FTC did not block either of Facebook’s buyouts during the Obama administration is a pivotal part of the dispute at hand. In terms of data the court felt the FTC didn’t provide enough detailed data to back up their claims.
The agency has 30 days to amend their suit. The court says the FTC needs to better define the market space relevant to what Facebook controls. The response also notes that it seemed like the FTC assumed the court was going to just agree that Facebook is a monopoly from the get-go.
However in the case of the states, the court opinion says:
“States’ Section 2 challenge to Facebook’s policy of preventing interoperability with competing apps fails to state a claim under current antitrust law, as there is nothing unlawful about having such a policy. While it is possible that Facebook’s implementation of that policy as to certain specific competitor apps may have violated Section 2, the Court does not reach that question because all such revocations of access occurred over five years before the filing of the Complaint."
Which in itself means the court says Congress needs to update their laws if they want to take action against Facebook.
Facebook released a statement reacting to the court decision:
“We are pleased that today’s decisions recognize the defects in the government complaints against Facebook. 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 news brought a positive reaction for Facebook on the stock market, as their market capitalization went above $1 trillion for the first time with the rise in shares.
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