FTC refiles antitrust suit against Facebook

Alexis Keenan and Daniel Howley
·3 min read
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FILE- In this March 29, 2018, file photo, the logo for Facebook appears on screens at the Nasdaq MarketSite in New York's Times Square. A German federal court has faulted aspects of Facebook’s handling of “hate speech,” at least in the past. It ruled Thursday that the social network giant can’t delete posts without at least informing users afterward, and must give users advance notice when it moves to suspend their accounts. (AP Photo/Richard Drew, File)
The logo for Facebook appears on screens at the Nasdaq MarketSite in New York's Times Square. (AP Photo/Richard Drew, File)

The Federal Trade Commission (FTC) has refiled a claim in federal court alleging that Facebook (FB) is breaking antitrust laws, buy running an illegal "buy-or-bury" scheme.

“Facebook has maintained its monopoly position in significant part by pursuing CEO Mark Zuckerberg’s strategy, expressed in 2008: 'it is better to buy than compete,'" the agency wrote in its refiled suit. "True to that maxim, Facebook has systematically tracked potential rivals and acquired companies that it viewed as serious competitive threats."

U.S. District Judge James Boasberg dismissed the FTC's previous filing in June, saying that the agency didn't properly identify how Facebook held an illegal monopoly over the personal social networking space, despite the agency's claims that its acquisitions of Instagram and What's App were meant to quash competition.

In a statement, a Facebook spokesperson said, "Our acquisitions of Instagram and WhatsApp were reviewed and cleared many years ago, and our platform policies were lawful. 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. We fight to win people’s time and attention every day, and we will continue vigorously defending our company.”

MUNICH, GERMANY - FEBRUARY 15: Founder and CEO of Facebook Mark Zuckerberg makes a speech as he attends the 56th Munich Security Conference at Bayerischer Hof Hotel in Munich, Germany on February 15, 2020. (Photo by Abdulhamid Hosbas/Anadolu Agency via Getty Images)
Founder and CEO of Facebook Mark Zuckerberg makes a speech as he attends the 56th Munich Security Conference at Bayerischer Hof Hotel in Munich, Germany on February 15, 2020. (Photo by Abdulhamid Hosbas/Anadolu Agency via Getty Images)

The FTC was tasked with rewriting the complaint under the agency's new chair, Lina Khan, a fierce critic of the tech industry. In July, Facebook requested that Khan be blocked from handling the agency's antitrust investigations into the company based on her public criticism of its market power.

The commission's Office of the Secretary, however, dismissed the petition.

In a tandem case brought against Facebook in the same court by 48 attorneys general, Judge Boasberg also ruled in Facebook’s favor and held that the states were barred from bringing their lawsuit because they waited too long to file their claims. The states had long known about Facebook’s 2012 acquisition of Instagram and 2014 acquisition of WhatsApp, Boasberg noted, and therefore were legally barred from raising the issue.

On July 28, the states filed a notice indicating their intent to appeal the judge’s dismissal to the U.S. Court of Appeals for the District of Columbia.

FILE - In this April 21, 2021, file photo, Lina Khan, nominee for Commissioner of the Federal Trade Commission (FTC), speaks during a Senate Committee on Commerce, Science, and Transportation confirmation hearing on Capitol Hill in Washington. Facebook on Wednesday, July 14 2021, is asking that Khan, the new head of the Federal Trade Commission, step away from antitrust investigations into the social network giant, asserting that her past public criticism of the company’s market power makes it impossible for her to be impartial. (Graeme Jennings/Pool Washington via AP, Pool, File)
FTC Chair Lina Khan. (Graeme Jennings/Pool Washington via AP, Pool, File)

The two cases against Facebook are among a handful of closely watched antitrust litigations that states, the federal government, private parties, and consumers have brought against dominant tech firms that also include Google and Apple.

Much like other cases targeting competition tactics of Big Tech, the states and the FTC claim that Facebook used its profitable subsidiaries Instagram and WhatsApp to illegally monopolize social media markets. In turn, the lawsuits said, the company should be required to divest either company, or both.

“We are pleased that [the] decisions recognize the defects in the government complaints,” Facebook told Yahoo Finance following judge Boasberg’s dismissals. “We compete fairly every day to earn people’s time and attention — and will continue to deliver great products — for the people and businesses that use our services.“

Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.

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