US Court dismisses anti-trust lawsuits against Facebook

A federal court Judge dismissed two anti-competition cases against Facebook on Tuesday on the basis of it being “legally insufficient”.

The court dismissed complaints brought in by the Federal Trade Commission and 46 states against the social media company for monopolistic practices. The ruling led Democrats and Republicans to make a strident call to rewrite the antitrust rules and pass the six major bills still pending in the Senate to rein in the Big Tech companies.

Judge James Boasberg’s of the federal court in Washington, DC ruled that the FTC laws had “failed to plead enough facts to plausibly establish” that Facebook had monopoly power over the social networking market. “[W]hatever it may mean to the public, ‘monopoly power’ is a term of art under federal law with a precise economic meaning: the power to profitably raise prices or exclude competition in a properly defined market,” he wrote.

Facebook Global Data Theft

Mark Zuckerberg at F8 2018.

Amy Klobuchar, Democratic chair of the Senate antitrust committee, tweeted: “The ruling shows why our antitrust laws need to be updated after years of bad precedent. We can’t meet the challenges of the modern digital economy with pared-down agencies & limited legal tools.” Ken Buck, Republican on the House antitrust committee, said: “Congress needs to provide additional tools and resources to our antitrust enforcers to go after Big Tech companies engaging in anti-competitive conduct.”

Judge Boasberg also dismissed a similar case led by New York attorney-general Letitia James, representing a group of 46 states and two other jurisdictions, saying that the allegations were too old to be prosecuted.

The FTC had accused the company in December of anti-competitive conduct and wanted it to break up from Instagram and WhatsApp, the companies it acquired in 2012 and 2014 for $1bn and $19bn, respectively.

It is believed that the FTC will appeal the case. It has 30 days to file a new complaint. In a press statement, the FTC said,“It was closely reviewing the opinion and assessing the best option forward.”

Facebook said about the decisions, “We are pleased that today’s decisions recognise the defects in the government complaints filed against Facebook.” It added that Facebook “competes fairly every day to earn people’s time and attention”.

Regulators and legislatures are finding it difficult to define antitrust laws for the digital era. Traditionally, anti-monopoly laws were implemented by showing unfair price manipulation by the dominant company, which ultimately the customers’ were forced to pay.

The judge said the commission only made a bare minimum allegation that Facebook had a dominant market share exceeding 60%, and that no other social network of comparable scale exists in the U.S.

“These allegations—which do not even provide an estimated actual figure or range for Facebook’s market share at any point over the past ten years—ultimately fall short of plausibly establishing that Facebook holds market power, “ he said.

But in the digital era, it is not about charging a higher price, it is more complex involving the number of people using your services in exchange for data. Lina Khan, a prominent Big Tech critic and the FTC chair, says such companies can abuse their market power without charging anything, whether by degrading services or demanding that customers hand over more personal data. “Facebook’s power is obvious, and yet we have a judge here getting into arcane details of what makes up the market,” said William Kovacic, a former FTC chair. “It will be held up as the precise example of why we need to change the law.”

News of the judge’s decisions saw Facebook’s shares trading up 4.2%, valuing the company above $1 trillion for the first time in its history.

Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

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