FTC Makes Another Attempt to Sue Facebook for Antitrust Violations

The Federal Trade Commission (FTC) is making another attempt to sue Facebook for antitrust violations. It’s a followup to the efforts to reign in “big tech”.

The FTC is making another attempt to sue Facebook for antitrust violations. As you might recall, back in 2020, there was a wave of litigation efforts against large tech giants. One of the biggest targets was Facebook. In fact, we reported on the FTC’s previous effort to sue Facebook at the time. At the time, the idea was to “reign in” big tech. Some lawsuits had some interesting ways to do so while others seemed a bit more superficial.

So, it was probably interesting to see the fact that the headlines more or less gradually vanished. Of course, just because the story largely disappeared from the headlines doesn’t necessarily mean the cases aren’t proceeding. So, we did some digging and it seems that the litigation efforts were largely tossed out of court. We dug up a report back in June from CNBC that noted these developments:

A federal court on Monday dismissed the Federal Trade Commission’s antitrust complaint against Facebook, as well as a parallel case brought by 48 state attorneys general, dealing a major setback to the agency’s complaint, which could have resulted in Facebook divesting Instagram and WhatsApp.

Shares of Facebook rose more than 4% on Monday following the rulings, sending the social media company’s market capitalization above $1 trillion for the first time.

“We are pleased that today’s decisions recognize the defects in the government complaints against Facebook,” the company said in a statement. “We compete fairly every day to earn people’s time and attention and will continue to deliver great products for the people and businesses that use our services.”

So, if you are a critic of “big tech”, that was no doubt a disappointing development. After all, they were waiting for the government to finally pull the trigger on these legal challenges against these large companies. When it finally happened, the effort wound up going down in flames like that.

More recently, we learned that the FTC is making another attempt at litigating Facebook for antitrust violations. From Vox:

One of the US government’s most powerful regulatory agencies, the Federal Trade Commission (FTC), has refiled its historic antitrust lawsuit against Facebook, claiming it’s a monopoly that is hurting competition and harming consumers.

The amended suit includes new evidence about how the company allegedly engages in monopolistic behavior to crush its competitors and keep its users hooked on its platform without adequate pressure to improve the quality of its products. The crux of the FTC’s argument is that Facebook has failed to make meaningful innovations on its mobile app on its own in the past several years. Instead, it resorted to what the FTC says is an illegal “buy-or-bury” strategy in which it either shut out outside apps by limiting their access to the Facebook platform or acquired apps like Instagram and WhatsApp that were successful competitors.

The lawsuit alleges that Facebook also “lured” in third-party app developers that were competitive threats, such as Path and Circle, by inviting them to be a part of Facebook’s open platform. Once these developers became dependent on access Facebook had offered them, Facebook would then reverse course, the suit claims. Ultimately, the FTC alleges, all this harms consumers by keeping them trapped in Facebook’s social media ecosystem, with fewer alternative apps.

“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 Holly Vedova, FTC Bureau of Competition acting director, in a press release announcing the lawsuit on Thursday.

With this being the second attempt, one would think that they are starting to lose a bit of credibility in their stance on this issue. One would hope that with this second attempt, the lawsuit would have gotten things right. If this effort fails, it really starts to add to the sense that Facebook feels somewhat invulnerable on this front. Could the FTC put together a case against Facebook? Probably. Are they capable of putting together a case against Facebook? That is starting to look precarious at this stage.

Drew Wilson on Twitter: @icecube85 and Facebook.

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