FTC Doubles Down, Hits Facebook with Amended Antitrust Complaint | September 2021
September 2021 | Volume 13, Issue 2
Read the full article from ABC News.
According to the article, the Federal Trade Commission is not backing down in its antitrust legal battle against Facebook.
The agency filed an amended complaint against the social media giant recently -- voting 3-2 along party lines to proceed -- after a federal judge in June dismissed an initial antitrust complaint brought by the FTC.
The new complaint alleges that after Facebook failed to develop innovative mobile features for its network, the company instead opted for an "illegal buy-or-bury scheme" to maintain dominance, according to a statement from the FTC. The agency also accuses the company of "unlawfully" acquiring innovative competitors after its own failed efforts to create popular mobile features.
"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," Holly Vedova, the FTC's Bureau of Competition acting director, said in a recent statement. "This conduct is no less anticompetitive than if Facebook had bribed emerging app competitors not to compete."
"The antitrust laws were enacted to prevent precisely this type of illegal activity by monopolists," Vedova added. "Facebook's actions have suppressed innovation and product quality improvements. And they have degraded the social network experience, subjecting users to lower levels of privacy and data protections and more intrusive ads."
Vedova said the FTC's latest legal move seeks to "put an end to this illegal activity and restore competition for the benefit of Americans and honest businesses alike."
Many of the arguments are along similar lines of the initial lawsuit, though the FTC said the new complaint includes additional data and evidence.
The new complaint in part focuses on the "transition period" when the emergence of smartphones and mobile internet use seemingly threatened Facebook's dominance.
The agency alleges in a statement that after Facebook suffered "significant failures during this critical transition period," the company opted instead to engage in anticompetitive behavior and buy up mobile innovators, including former rivals Instagram and WhatsApp.
The agency also takes aim at Facebook's treatment of software developers, saying that after starting its Facebook Platform as an open space for third-party software developers, it abruptly reversed course and required developers to agree to conditions that prevented successful apps from emerging as competitors.
When he dismissed the initial antitrust complaint, District Judge James Boasberg stated that the agency's complaint "is legally insufficient and must therefore be dismissed." Boasberg said the FTC failed to provide enough facts to prove Facebook's alleged monopolistic behavior.
Lina Khan, a vocal critic of Big Tech's dominance, took the helm at the FTC earlier this year, leading many to speculate a crackdown on the industry could be looming. Facebook has petitioned for Khan to be recused from the antitrust investigation, but the agency recently dismissed the petition.
Facebook blasted the suit as "meritless" in a recent statement to the media, and noted that its acquisitions of Instagram and WhatsApp were cleared by the FTC at the time.
"It is unfortunate that despite the court's dismissal of the complaint and conclusion that it lacked the basis for a claim, the FTC has chosen to continue this meritless lawsuit. There was no valid claim that Facebook was a monopolist -- and that has not changed," a company 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."
Discussion Questions
- Describe “antitrust.” What is the purpose of antitrust law?
“Antitrust” is a broad term referring to legislation preventing or controlling trusts or other monopolies, with the intention of promoting competition in business. - What is the Federal Trade Commission (FTC?) What is the FTC’s role regarding the enforcement of antitrust law?
The Federal Trade Commission (FTC) is a federal administrative agency broadly charged with the responsibility of protecting consumers. Since antitrust law is designed to prevent or control trusts or other monopolies with the intent of promoting competition in business and thereby benefiting consumers, the FTC is empowered to enforce antitrust law. For more information visit the FTC website. - Based on the information provided in the article, do you believe Facebook violated U.S. antitrust law? Why or why not?
This is an opinion question, so student responses will likely vary.
The pertinent information provided in the article is the following:
The new (amended) complaint alleges that after Facebook failed to develop innovative mobile features for its network, the company instead opted for an "illegal buy-or-bury scheme" to maintain dominance, according to a statement from the FTC. The agency also accuses the company of "unlawfully" acquiring innovative competitors after its own failed efforts to create popular mobile features.
"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," Holly Vedova, the FTC's Bureau of Competition acting director, said in a recent statement. "This conduct is no less anti-competitive than if Facebook had bribed emerging app competitors not to compete."
In your author’s opinion, at this point, these are merely allegations, and the FTC as the plaintiff will have the burden of proving in court, by the greater weight of the evidence, that Facebook’s actions violated U.S. antitrust law. In a civil action, the initial burden of proof is always on the plaintiff.