US antitrust enforcers revive monopoly case against Facebook
A lawsuit filed in federal court in the US capital said Facebook used 'anticompetitive acquisitions' to protect its dominance
US regulators Thursday filed a new lawsuit accusing Facebook of maintaining an illegal monopoly in social networking, two months after the initial case was dismissed by a judge.
In the amended complaint, the Federal Trade Commission said Facebook's dominance "is protected by high barriers to entry," and that "even an entrant with a superior product cannot succeed against the overwhelming network effects enjoyed by an incumbent personal social network."
The lawsuit filed in federal court in the US capital said Facebook used "anticompetitive acquisitions" to protect its dominance including of the image-centric social platform Instagram and the messaging service WhatsApp.
FTC officials said the deals amounted to "illegal buy-or-bury" schemes.
"Facebook lacked the business acumen and technical talent to survive the transition to mobile. After failing to compete with new innovators, Facebook illegally bought or buried them when their popularity became an existential threat," said acting FTC competition bureau chief Holly Vedova in a statement
"This conduct is no less anticompetitive than if Facebook had bribed emerging app competitors not to compete... The FTC's action today seeks to put an end to this illegal activity and restore competition for the benefit of Americans and honest businesses alike."
The lawsuit, which could take years to go through the courts without a settlement, calls for the court to order "divestiture of assets" including WhatsApp and Instagram to restore competition.
The lawsuit comes amid a rising "techlash" against the largest US tech firms which dominate key economic sectors and have become stronger during the pandemic as more people turn to online services.
- 'Distinct market' -
The Federal Trade Commission denied Facebook's request to disqualify agency chief Lina Khan from antitrust proceedings based on her writings about Big Tech before she took office
Facebook, which has long denied it maintains a monopoly, said in a statement: "We are reviewing the FTC's amended complaint and will have more to say soon."
In June, US District Judge James Boasberg said in a 53-page opinion that the agency's initial lawsuit lacked evidence, notably in defining the market that Facebook was allegedly monopolizing.
The federal agency based its initial case on a "vague" assertion that Facebook controlled more than 60 percent of the social networking market, but the FTC "does not even allege what it is measuring," according to the judge's June 28 ruling, which allowed the agency an opportunity to refile the case on different grounds.
In the new lawsuit, the FTC argued that "personal social networking services are a unique and distinct type of online service," in an effort to counter Facebook's claim that people have numerous choices for connecting with people online.
Using this definition, the FTC said, Facebook controls more than 65 percent of the market with its core social network and Instagram, giving it monopoly power.
"Because a core purpose of personal social networking is to connect and engage with personal connections, it is very difficult for a new entrant to displace an established personal social network in which users' friends and family already participate," the lawsuit argued.
The new lawsuit maintained that TikTok -- the popular Chinese-owned video app which Facebook claims is a rival -- is "a content broadcasting and consumption service that is not an acceptable substitute for personal social networking services."
The FTC said meanwhile it would deny Facebook's request to disqualify agency chair Lina Khan, a longtime critic of Big Tech who has called for more aggressive actions against the major firms.
"As the case will be prosecuted before a federal judge, the appropriate constitutional due process protections will be provided to the company," the FTC said in dismissing Facebook's request for recusal.
The FTC split 3-2 in its decision to refile the case against Facebook.
Republican FTC member Christine Wilson said in a statement it was "bad policy" to try to undo mergers that were previously approved by regulators.
Wilson said doing so would "undermine the integrity of the premerger notification process established by Congress and the repose that it provides to merging parties that have faithfully complied with its requirements."
