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: In new Facebook antitrust push, FTC says social network ‘illegally bought or buried’ potential rivals

The Federal Trade Commission filed a new version of its antitrust lawsuit against Facebook Inc. on Thursday, targeting its acquisitions and other actions after a judge questioned whether the social network truly owned monopoly power.

The complaint, filed in U.S. District Court for the District of Columbia, alleges that “after repeated failed attempts to develop innovative mobile features for its network, Facebook instead resorted to an illegal buy-or-bury scheme to maintain its dominance.”

“It unlawfully acquired innovative competitors with popular mobile features that succeeded where Facebook’s own offerings fell flat or fell apart. And to further moat its monopoly, Facebook lured app developers to the platform, surveilled them for signs of success, and then buried them when they became competitive threats,” the FTC alleges. “Lacking serious competition, Facebook has been able to hone a surveillance-based advertising model and impose ever-increasing burdens on its users.”

The agency had until Thursday to file an amended complaint to continue its claims against the social-networking giant, and commissioners agency voted 3-2 along party lines to amend its monopoly claim, with FTC Chair Lina Khan supporting the new complaint. The commission denied Facebook’s request that Khan, a fierce critic of Big Tech, be recused.

See also: New FTC chair Lina Khan is Big Tech’s biggest nightmare

“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,” Holly Vedova, FTC Bureau of Competition Acting Director, said. “This conduct is no less anticompetitive than if Facebook had bribed emerging app competitors not to compete.”

Facebook
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which has until Oct. 4 to legally respond to the FTC’s amended complaint, said it is reviewing the complaint and “will have more to say soon.” Facebook shares were trading near flat Thursday, maintaining a trillion-dollar valuation the company first achieved when the original complaint was tossed out.

Tech attorney Adam Kerpelman, who is vice president of strategy at NetWise Data, said the new FTC complaint “definitely has more teeth than the last one.”

“The last claim failed largely because it didn’t have teeth,” he told MarketWatch. “It was rejected because it made a nebulous ‘monopoly’ claim. Assuming the FTC has the proof to back this up, ideally communications from Facebook execs, for example, then the claim the FTC is making here is way more specific.”

The FTC filed a lawsuit in December 2020 that accused Facebook of breaking antitrust law by snapping up Instagram and WhatsApp to gain an unfair advantage over smaller rivals. The agency is seeking to force Facebook to sell Instagram, which it bought in 2012 for $1 billion, and WhatsApp, which it bought in 2014 for $19 billion.

For more: FTC has a chance for a do-over in its ‘fiasco’ antitrust case against Facebook

But in June, U.S. District Judge James E. Boasberg took issue with the FTC’s claim that Facebook holds monopoly power, or more than 60%, in the personal social-networking category. The definition excluded platforms used mainly for streaming video, such as Google’s
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YouTube, and interest-based platforms like Microsoft Corp.’s
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LinkedIn or the fitness social network Strava.

Boasberg said the 60% estimate was “too speculative and conclusory to go forward.”

“Such an unsupported assertion might (barely) suffice in a Section 2 case [of the Sherman Act] involving a more traditional goods market, in which the Court could reasonably infer that market share was measured by revenue, units sold, or some other typical metric,” Boasberg wrote.

But, he added, “this defect could conceivably be overcome by repleading.”

“While there are certainly bones that one could pick with the FTC’s market-definition allegations, the Court does not find them fatally devoid of meat,” Boasberg wrote.

The larger picture: Big Tech has an antitrust target on its back, and it is only going to get bigger

Alex Harman, competition policy advocate for Public Citizen, a nonprofit, progressive consumer rights advocacy group and think tank founded by Ralph Nader, lauded the amended complaint.

“The Federal Trade Commission, led by Lina Khan, will not be intimidated and will not stand down in the face of judicial obstacles to take on the power of Big Tech monopolies like Facebook,” Harman said. “The decision to refile this case should be a message to Facebook and other monopolists that there is a new sheriff in town and the party is over.”

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