FTC renews lawsuit against Facebook

After an initial setback, the FTC’s antitrust lawsuit against Facebook, which recently changed its name to Meta, is continuing.

Back in June, a U.S. federal judge ruled that the FTC’s initial allegations of Facebook’s monopoly were too vague. But the agency refiled, and now, the same judge has ruled that the FTC’s amendments against Facebook are “more robust and detailed than before” and can go ahead. The court rejected Facebook’s request to dismiss the case altogether, a decision that hits Facebook’s ongoing battle with government regulators over its market power.

The FTC is one of the most powerful regulatory agencies in the United States. If it wins its lawsuit against Facebook, it could have a significant negative impact on the social media company.

“FTC staff have filed a strong amended complaint, and we look forward to trial,” Holly Vedova, director of the FTC’s Bureau of Competition, said in a statement to Recode.

Meanwhile, Facebook has expressed confidence that it will ultimately succeed in its fight against the FTC.

“We believe the evidence will reveal fundamental weaknesses in these claims. Our investments in Instagram and WhatsApp have made them what they are today. They are good for competition and for the people and businesses who choose to use our products,” said a Meta spokesperson. Chris Sgro said in part in a statement to Recode.

In June, a federal judge Original FTC lawsuit dismissed, which was a big win for Facebook at the time. In response, the FTC refiled the lawsuit — instead of taking a new approach, it stuck to its main arguments against Facebook, this time supporting them in more detail.This is another sign that Regulation pushes containment The power of Facebook and other major tech companies like Amazon and Apple has not slowed down when it hits a snag.

The amended lawsuit includes new evidence of how the company allegedly engaged in monopolistic practices to crush its competitors and get its users addicted to its platform without enough pressure to improve the quality of its products. The crux of the FTC’s argument is that Facebook has failed to innovate meaningfully on its mobile apps on its own over the past few years. Instead, it employs what the FTC calls an illegal “buy or bury” strategy, either by restricting access to Facebook’s platform for external apps or by acquiring apps from successful rivals like Instagram and WhatsApp to keep them out.

The lawsuit also alleges that Facebook “coaxed” third-party app developers, such as Path and Circle, into joining them by inviting them to become part of Facebook’s open platform. Once those developers started relying on the access Facebook gave them, Facebook changed course, the lawsuit said. Ultimately, the FTC claims, all of this hurts consumers because they’re trapped in Facebook’s social media ecosystem with fewer alternative apps. On this claim, a federal judge ruled that the FTC did not have sufficient evidence. But it did say that the FTC can continue to claim that Facebook engaged in anticompetitive business practices when it acquired rivals like Instagram and WhatsApp.

“Facebook lacked the business acumen and technical talent to survive the transition to mobile devices. After failing to compete with new innovators, when their popularity became an existential threat, Facebook illegally acquired or buried them, ” Vedova said in a press release announcing the revised lawsuit in August.

Hours after filing a revised lawsuit in August, Facebook tweet A thread responds.

The company argued that there was no “valid claim” that Facebook was a monopoly, noting that the FTC approved the company’s acquisitions of WhatsApp and Instagram when it first happened.

“Unfortunately, the FTC chose to continue this baseless lawsuit despite the court’s dismissal of the complaint and its conclusion that it lacked merit for its claim,” Facebook wrote.

The company also plans to release its compelling products New virtual reality work meeting app — Done with the Facebook CEO Mark Zuckerberg shines on CBS — on the same morning that the new lawsuit was expected to be dropped. Ironically, Facebook’s new virtual reality meeting tool is in many ways similar to existing software from smaller companies, suggesting that existing antitrust laws aren’t preventing tech companies from replicating each other in real time.

The amended lawsuit also responds to Facebook’s demands for FTC chair Lina Khan Recuses himself because the tech company claims a conflict of interest Because of her past academic work criticizing the market power of tech companies like Amazon.Some lawmakers like Sen. Elizabeth Warren (D-MA) Criticism pushed Khan as an attempt to “bully” the FTC. But it didn’t appear to be working — the FTC reiterated in the amended lawsuit that it didn’t intend for Khan to shy away from itself. A federal judge ruled Tuesday that Khan’s recusal was insufficient.

In the past, Facebook has said that the success of companies like TikTok and Snap is evidence of healthy competition in the social media industry. However, the amended lawsuit claims that TikTok is not actually a Facebook competitor because it is primarily used “to share video content with an audience that the publisher does not personally know, rather than to connect and interact with friends and family in person.”

It’s too early to say whether the lawsuit will succeed and how much it will affect Facebook’s business. Facebook has ample resources to fight the case, and it will make the most persuasive defense to why it’s not actually a monopoly. But the court rejected Facebook’s attempt to block the case, a sign that the FTC — with Khan at the helm — isn’t holding back.

Updated January 11, 2022 at 3:00 PM PT: This article has been updated to include new legal proceedings in this case.

Updated August 19 at 12:27pm PT: This article has been updated to include a comment from Facebook posted to Twitter.