U.S. Gets ‘Second Time Lucky’ in Reviving Facebook Monopoly Case

Meta Platforms Inc.’s Facebook must face the U.S. government’s monopoly lawsuit alleging that the company abused its dominance and should be broken up, a judge ruled.

U.S. District Judge James Boasberg in Washington Tuesday denied Facebook’s motion to dismiss the Federal Trade Commission’s revised antitrust complaint, which the agency refiled after the judge in June dismissed the case. Boasberg, who started his opinion by writing, “Second time lucky?,” said the FTC’s allegations are “are far more robust and detailed than before.”

“The FTC has now alleged enough facts to plausibly establish that Facebook exercises monopoly power,” the judge wrote. “The agency has also explained that Facebook not only possesses monopoly power, but that it has willfully maintained that power through anticompetitive conduct.”

The decision is a major win for the FTC and Chair Lina Khan, who took over the case when she was named to lead the agency by President Joe Biden. The FTC filed the new complaint in August with new details to bolster the agency’s claim that Facebook dominates the U.S. personal social-networking market and has the power to exclude competition.

The FTC is seeking a court order to unwind Facebook’s acquisitions of Instagram and WhatsApp, arguing the two deals -- which the FTC initially approved -- were part of a pattern by Facebook and Chief Executive Officer Mark Zuckerberg to eliminate companies as competitive threats by buying them. The lawsuit will now proceed to the next stage, known as discovery, where the two sides will gather evidence for trial.

The lawsuit is part of a broad effort by competition enforcers in the U.S. to rein in the power of the biggest U.S. tech companies. Besides the Facebook case, the Justice Department and state attorneys general across the country have multiple lawsuits pending against Alphabet Inc.’s Google. The Justice Department’s Google case is scheduled to go to trial in 2023.

The FTC said in a statement that it looks forward to going to trial.

In a statement, Meta defended its acquisitions of Instagram and WhatsApp as good for consumers.

“We’re confident the evidence will reveal the fundamental weakness of the claims,” the company said. “Our investments in Instagram and WhatsApp transformed them into what they are today. They have been good for competition, and good for the people and businesses that choose to use our products.”

Facebook had argued in its motion to dismiss that Khan should have recused herself from the commission’s 3-2 vote to file the new complaint. The company said Khan’s past criticism of Facebook before becoming chair of the FTC means she is biased.

In his decision, Boasberg rejected Facebook’s argument.

“There is no indication that Chair Khan’s decision to seek reinstatement of the FTC’s suit against Facebook was based on anything other than her belief in the validity of the allegations,” he said. “Such behavior does not necessitate recusal.”

The case is U.S. Federal Trade Commission v. Facebook Inc., 20-3590, U.S. District Court for the District of Columbia.

(Updates with court ruling in second to last paragraph.)

To contact the reporter on this story:
David McLaughlin in Washington at dmclaughlin9@bloomberg.net

To contact the editors responsible for this story:
Sara Forden at sforden@bloomberg.net

Peter Blumberg

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