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An antitrust suit against Facebook by the FTC and several states had the wind taken out of its sails today by a federal judge, who ruled that the plaintiffs don’t provide enough evidence that the company exerts monopoly control over social media. The court was more receptive, however, to revisiting the acquisitions of Instagram and WhatsApp, and the case was left open for regulators to take another shot at it.
The court decision was in response to a Facebook motion to dismiss the suit. Judge James Boesberg of the D.C. circuit explained that the provided evidence of monopoly and antitrust violations was “too speculative and conclusory to go forward.” In a more ordinary industry, it might have sufficed, he admits, but “this case involves no ordinary or intuitive market.”
It was incumbent on the plaintiffs to back up their allegation of Facebook controlling 60 percent of the market with clear and voluminous data and a convincing delineation of what exactly that market comprises — and it failed to do so, wrote Boesberg. Therefore he dismissed the complaints in accordance with Facebook’s legal argument. (I’ve asked the FTC and Facebook for comment and will update this post if I hear back.)
On the other hand, Boesberg is sensible that lack of evidence in the record does not mean that the evidence does not exist. So he his giving the FTC and states 30 days to amend their filing, after which the complaints will be reevaluated.
He also found that Facebook’s logic for dismissing the suit’s allegations regarding its controversial acquisitions of Instagram and WhatsApp was lacking.
Facebook argued that even supposing that these acquisitions were somehow problematic, the FTC is not authorized to prosecute such “long-past conduct” and is limited to more recent or imminent problems. Boesberg was not convinced, finding precedent that essentially says such mergers are legally considered current as long as they exist, and the government can revisit them any time it thinks it has cause. (That’s not the case for the state lawsuits, however, which he dismissed outright for coming too long after the fact.)
That may very well be the plan of the FTC’s new Chair, Lina Khan, who has taken a hawkish regulatory position regarding antitrust in general and past acquisitions specifically. At her confirmation hearing she commented that the approvals of the mergers may have been made without complete information and as such represented a “missed opportunity” to understand and build rules around.
We’ll likely know more following the upcoming FTC meeting on Thursday. The 30 day punt in fact may be a great opportunity for Khan to put her ideas into practice, as the judge practically literally invites them to rewrite the complaint with more information. Whether she and the FTC have enough material to put together a compelling case remains to be seen, but one thing is for certain: Facebook should put the champagne back in the fridge, for now at least. Khan may not stop at a slap on the wrist.