FTC's Second Antitrust Attempt Against Facebook Gets Past The First Hurdle
As you'll recall, at the end of 2020, the FTC filed an antitrust case against Facebook. Last summer, the district court dismissed the case, noting that the complaint was "legally insufficient," and didn't really back up its central claims. Based on that, the FTC went back to the drawing board and filed an amended complaint last August. As we noted, the amended complaint was better than the first one -- which was heavy on narrative, but little on support to back it up. The amended complaint had more in it, though we still felt that the market definition was odd, and some of the complaint seemed to undermine other parts of it.
Either way, Facebook again asked the court to dismiss it, but this time, they're letting the case move forward. Basically, the court says that on a second pass, the FTC has actually provided at least some support of the central arguments in the complaint:
Eagerly accepting such invitation, the FTC has filed an Amended Complaint containingsignificant additions and revisions aimed at addressing the shortcomings identified in the Court'sprior Opinion. The core theory of the lawsuit remains essentially unchanged. The Commissioncontinues to allege that Facebook has long had a monopoly in the market for PSN services andthat it has unlawfully maintained that monopoly via two types of actions: first, by acquiringcompetitors and potential competitors - most notably, Instagram and WhatsApp - that itbelieved were well situated to eat into its monopoly; and second, by implementing and enforcing policies that prevented interoperability between Facebook and other apps that it viewed asnascent threats. The facts alleged this time around to fortify those theories, however, are farmore robust and detailed than before, particularly in regard to the contours of Defendant'salleged monopoly.
The court more or less says that Facebook may still prevail in the end -- noting that the FTC will "face a tall task down the road in proving its allegations," but, at this stage of the game, the allegations are enough to allow the case to move on to the next stage.
The court does reject one part of the FTC's case -- that Facebook's interoperability policies were anti-competitive:
The Court will not, however, allow the allegations surroundingFacebook's interoperability policies (also known as the Platform policies) to move forward; theyfounder for the same fundamental reasons as explained before: Facebook abandoned the policiesin 2018, and its last alleged enforcement was even further in the past.
Given the beefed up filing, this isn't a huge surprise. I still think that the FTC's case here remains surprisingly weak. I honestly expected something a lot more damning than the weird market definition and the allegations -- many of which are presented in ways that could easily be removing important context (such as reasons for actions that were not anti-competitive, but for the benefit of users).
Either way, the case is about to get a lot more expensive for Facebook, and even if the odds are that it would still prevail in the end, it might try to settle the case to avoid having to go through the process. That said, with Lina Khan leading the FTC, I'm guessing the FTC is willing to press this case forward as far as possible, even if it means an eventual loss in court...