Facebook has held a ‘durable monopoly’ for a decade, FTC says in amended suit
Facebook has held a monopoly over personal social networking for the past decade, according to a beefed-up antitrust suit by the Federal Trade Commission filed Thursday.
The FTC’s amended suit, which comes two months after a federal judge dismissed an earlier version, seeks to force Facebook to restructure or sell off assets including Instagram and WhatsApp that it says help the company squash competition.
“Facebook holds monopoly power in the provision of personal social networking in the United States and has held such power continuously since at least 2011,” the FTC wrote, accusing the company of illegally maintaining a “durable monopoly.”
The new complaint is longer and more detailed than a Trump-era suit against the company that was dismissed this June. At the time, Washington, DC, federal Judge James E. Boasberg said the complaint was “vague” and “too speculative” in its arguments.
In Thursday’s complaint, the FTC retained its core argument that Facebook engaged in a “buy or bury” scheme to eliminate competition including Instagram and WhatsApp, helping the firm secure an illegal monopoly that hurts consumers.
“Unable to maintain its monopoly or its advertising profits by fairly competing, Facebook’s executives addressed this existential threat by buying up the new mobile innovators, including its rival Instagram in 2012 and mobile messaging app WhatsApp in 2014, who had succeeded where Facebook had failed,” the FTC alleged.
But the new filing also contains more fleshed-out language that seems designed to address Boasberg’s concerns. In particular, the new complaint — which comes in at 80 pages, compared to the original’s 53 — was clearer about the definition of the “personal social media” market.
The FTC argued that Facebook’s sphere of competition is separate from online platforms like YouTube or TikTok, which users do not primarily use to communicate with friends and family. Therefore, TikTok’s widespread popularity in the US does not serve as an argument against Facebook maintaining a monopoly within the sphere of social media platforms that people use for personal communication, according to the FTC.
“Snapchat is the next-largest provider of personal social networking services, but its user base pales in comparison: Snapchat has tens of millions fewer monthly users than either Facebook Blue or Instagram,” the FTC said.
Facebook, which has until Oct. 4 to respond to the amended complaint in court, called the amended suit “meritless” in a Thursday statement.
“Our acquisitions of Instagram and WhatsApp were reviewed and cleared many years ago, and our platform policies were lawful,” a Facebook spokesperson said. “The FTC’s claims are an effort to rewrite antitrust laws and upend settled expectations of merger review, declaring to the business community that no sale is ever final.”
Facebook’s stock was up 0.1 percent Thursday afternoon.
Shortly after Boasberg rejected the FTC’s initial petition, Facebook requested that President Biden-appointed FTC Chair Lina Khan recuse herself from antitrust actions involving the company because she had written critically about big tech in the past.
The FTC said Thursday that it had rejected the petition after having “carefully reviewed” it, indicating that Khan is likely to play an active role in the case.
Also on Thursday, Facebook revealed a new feature called “Facebook Workrooms,” which is designed to replace in-person business meetings and Zoom calls with a virtual reality world where people are represented by avatars.
Rep. Jan Schakowsky (D-Ill.) accused Facebook of timing the announcement to distract from the FTC news, since Thursday was the last day the FTC was eligible to file an amended complaint under Boasberg’s decision.
“Facebook wants to distract you from the FTC’s updated antitrust filing today,” Schakowsky wrote in response to an article about the Workrooms feature.