Facebook Asks Court To Throw Out FTC's Revised Antitrust Claims

Facebook on Monday urged a federal judge to dismiss the Federal Trade Commission's revised complaint alleging that the company violated anti-monopoly laws.

“The FTC still has no valid factual basis for alleging monopoly power,” Facebook writes in papers filed with U.S. District Court Judge Boasberg in Washington, D.C.

Boasberg dismissed an earlier version of the FTC's lawsuit against Facebook on the grounds that the agency's allegations, even if proven true, wouldn't establish that Facebook held market power over personal social networking services.

Facebook said Monday that the FTC's amended complaint, filed in August, “rests on guesswork rather than facts.”

The FTC's lawsuit, first filed last December, largely centers on Facebook's purchases of social media service Instagram (acquired for $1 billion in 2012) and messaging service WhatsApp (bought for $19 billion in 2014).

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The FTC reviewed those deals when they were announced and allowed them to close.

The agency now contends those purchases were part of an illegal “buy-or-bury scheme” that allowed Facebook to maintain its dominance in the “personal social networking market.”

Facebook counters in its new papers that those purchases benefited consumers.

“The FTC challenges acquisitions that the agency cleared after its own contemporaneous review and that resulted not in harm but product improvements, price cuts, and dramatic output expansion to the benefit of many millions of U.S. consumers," Facebook writes.  

When Boasberg dismissed the original complaint, he noted that the FTC's complaint “says almost nothing concrete on the key question of how much power Facebook actually had, and still has, in a properly defined antitrust product market.”

He also said that even though the the complaint alleged that Facebook commanded a market share of more than 60%, the agency didn't explain what it was measuring, and hadn't offered metrics -- such as ad revenue or time spent on the service by users -- to arrive at that figure.

The FTC attempted to address those concerns in its amended complaint, which alleged that Facebook's share of time spent by users of apps providing personal social networking services in the U.S. has exceeded 80% since 2012.

The agency added in its revised lawsuit that more than 200 million people in the U.S. visited Facebook in every month of 2020, while more than 138 million in the country visited Instagram, according to Comscore data. The agency also said Comscore data indicated that from September 2012 through December 2020 Facebook’s share of time spent by users of apps providing “personal social networking services” in the United States averaged 92% per month.

Facebook says in its new motion that those additional allegations aren't enough to warrant further proceedings. The company makes several arguments, including that the Comscore data doesn't measure usage of personal social networking services, and that time spent on a service doesn't translate to its market share.

The FTC also said in its amended complaint that “personal social networking” is distinct from other online social media services, such as Twitter, Reddit and TikTok.

“Twitter focuses on enabling users to stay informed about topics that interest them, while Reddit facilitates conversations centered around topics of interest to the participants,” the FTC said in its amended complaint. “TikTok users primarily view, create, and share video content to an audience that the poster does not personally know, rather than connect and personally engage with friends and family.”

But Facebook counters that the FTC's proposed “personal social networking services” market is a “litigation-driven fiction at odds with the commercial reality of intense competition with surging rivals like TikTok and scores of other attractive options for consumers.”

Facebook additionally contends that FTC's 3-2 decision to authorize the amended complaint was invalid on the grounds that Chair Lina Khan, who cast the decisive vote, shouldn't have participated in the matter.

In July, Facebook sought to disqualify Khan from participating in any decisions regarding the agency's antitrust lawsuit, due to prior statements she made about the company. Facebook specifically called attention to article she co-authored in 2019 that says large online platforms “have been credibly associated with a host of social ills,” including facilitating interference in elections, inciting genocide in Myanmar, and enabling discrimination.

The FTC said in August that Facebook's request was “dismissed” by the FTC's Office of the Secretary.

Facebook now says that Khan’s participation in the decision to amend the complaint against the company violates its right to due process of law, as well as federal ethics rules.

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