“FTC’s second attempt shows again this is an attack on pro-competitive acquisitions the FTC itself cleared more than a decade ago,” said Facebook as it filed its second motion to dismiss the lawsuit filed by the United States Federal Trade Commission (FTC) against the platform.
Background: FTC’s amended complaint from August against Facebook alleged that the social media platform —
- Resorted to a ‘buy or bury’ scheme to maintain services’ dominance
- Unlawfully acquired innovative competitors that succeeded where Facebook’s own offerings “fell flat”
- Lured app developers, surveilled them for signs of success, and “buried” them when they became competitive threats
The crux of the amended complaint was that Facebook was positioning itself to be a monopoly by ‘unlawfully’ acquiring competitors — specifically mobile innovators including its rival Instagram in 2012 and WhatsApp in 2014. The amended complaint filed in the US District Court for the District of Columbia followed a June 28 dismissal of the trade regulator’s original complaint.
FTC has no valid factual basis for claiming monopoly power: Facebook
The social media platform in its rebuttal to FTC’s second motion made these salient points —
No data provided to support dominant share of personal social networking services (PSNS) market: Facebook in its motion said that the data FTC provided regarding usage of Facebook, Instagram and Snapchat, was commercial data and that it did not measure PSNS usage. The FTC in its motion reportedly asked the Court to “assume arguendo” (for the sake of argument) that data from a different market “can establish share in the alleged market (PSNS) without any facts to support assumption”.
The absence of any data, from any source, for a “PSNS” market makes clear that the proposed market reflects the FTC’s litigation imperatives — not commercial realities — Facebook
No facts provided to prove that Facebook’s market position was protected by “barriers to entry”: Facebook said that entry (into the market) was not ‘not only possible, but in fact occurred, including by startups like Instagram and Snapchat. It added that FTC did not provide any data or facts that would show that Facebook prevented firms with established networks like YouTube, iMessage, Twitter, and Tiktok from becoming PSNS rivals.
No direct evidence to prove that Facebook limited output to raise prices above competition: Taking cognisance of the FTC’s claims that it had direct evidence that Facebook “limited output to profitably raise prices above the competitive level”, the social media platform said that the agency had not provided any direct evidence. “Facebook has never charged users any price or restricted output — not before it allegedly became a monopolist and never since,” the motion read.
Regarding acquisitions:
As to the acquisitions, the agency offers only its speculation that consumers might have better products if Instagram and WhatsApp had remained independent. Such speculation has never been a valid basis for condemning acquisitions as “exclusionary” — Facebook
Lina Khan should have recused herself: Facebook
FTC chair Lina Khan cast the deciding vote in the decision to amend the case and try a second time, and she should have recused herself, Facebook said in the filing.
The FTC’s vote to authorize the amended complaint was invalid, and the amended complaint should be dismissed for that reason. The new Chair cast the decisive vote in a split 3-2 decision. As Facebook demonstrated in its petition to recuse the Chair from participation in this proceeding, the Chair’s authorship of a House Judiciary Subcommittee report asserting that Facebook has violated Section 2 — among other ad hominem public charges — at the very least creates the appearance that the Chair has prejudged the facts and cannot be unbiased or impartial — Facebook
On July 14, Facebook filed a petition requesting orders from the court directing FTC chair Lina Khan to recuse herself from participating in any decisions concerning FTC’s antitrust case against Facebook.
When a new Commissioner has already drawn factual and legal conclusions and deemed the target a lawbreaker, due process requires that individual to recuse herself from related matters when acting in the capacity of an FTC Commissioner — Facebook said in its petition
Timeline: FTC v. Facebook
The case to break up Facebook was first filed by the FTC along with 46 US states on December 8, 2020. The case proceeded with bipartisan support and alleged that Facebook broke antitrust laws by, among other things, acquiring WhatsApp and Instagram.
- On June 28, 2021, Judge James E Boasberg dismissed the petition, a blow to the FTC’s efforts. Boasberg said that the FTC had not adequately backed up its claim that Facebook had a monopoly. The judge gave the FTC time to refile the case with this evidence.
- On July 14, 2021, Facebook petitioned the FTC that Lina Khan, the commission’s chair, should be recused from proceedings involving Facebook because of past statements she had made about the company’s business practices. “The FTC’s Office of General Counsel carefully reviewed Facebook’s petition to recuse Chair Lina M. Khan. As the case will be prosecuted before a federal judge, the appropriate constitutional due process protections will be provided to the company. The Office of the Secretary has dismissed the petition,” the FTC later said.
- On August 19, 2021, an amended petition was filed by the FTC wherein it alleged that Facebook resorted to a buy or bury scheme.
- On October 4, 2021, Facebook filed a second motion against FTC’s amended petition requesting a dismissal of the lawsuit.
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