Business

Here are the antitrust arguments against Facebook and why a judge rejected them.

Read more at www.nytimes.com

A federal judge on Monday eviscerated arguments in two antitrust suits against Facebook — one filed by the Federal Trade Commission, and the other by attorneys general from 46 states and the District of Columbia and Guam.

The judge, James E. Boasberg of U.S. District Court for the District of Columbia, said the federal government had not made its case that Facebook held a monopoly over social networking. And he said the states had waited too long to bring their case.

Here are the arguments the prosecutors made and the judge’s response:

The Argument

The Federal Trade Commission said that “Facebook has maintained its monopoly position by buying up companies that present competitive threats and by imposing restrictive policies that unjustifiably hinder actual or potential rivals that Facebook does not or cannot acquire.” Facebook achieved monopoly power after “toppling early rival Myspace,” the agency said, and has become “the largest and most profitable social network in the world.”

The Opinion

Judge Boasberg said that the commission had not sufficiently proved that Facebook was a monopoly and that the agency’s definition for social media was too vague.

“The F.T.C.’s complaint says almost nothing concrete on the key question of how much power Facebook actually had, and still has,” Judge Boasberg wrote. “It is almost as if the agency expects the court to simply nod to the conventional wisdom that Facebook is a monopolist. After all, no one who hears the title of the 2010 film ‘The Social Network’ wonders which company it is about.

“Yet, whatever it may mean to the public, ‘monopoly power’ is a term of art under federal law with a precise economic meaning: the power to profitably raise prices or exclude competition in a properly defined market. To merely allege that a defendant firm has somewhere over 60 percent share of an unusual, nonintuitive product market — the confines of which are only somewhat fleshed out and the players within which remain almost entirely unspecified — is not enough.”

The Argument

The commission also claimed that Facebook maintained its dominance by threatening to cut off software developers from plugging into the social network if they made competing products. It also argued that, although Facebook had reversed a policy that allowed it to cut off stand-alone apps that replicated its features, “Facebook is likely to reinstitute such policies if such scrutiny passes.”

The Opinion

“A monopolist has no duty to deal with its competitors, and a refusal to do so is generally lawful,” Judge Boasberg wrote. “To be actionable, such a scheme must involve specific instances in which that policy was enforced (i) against a rival with which the monopolist had a previous course of dealing; (ii) while the monopolist kept dealing with others in the market; (iii) at a short-term profit loss, with no conceivable rationale other than driving a competitor out of business in the long run.”

“There are no facts alleged, moreover, suggesting that the antitrust ‘scrutiny’ the company is facing is ‘about to’ pass or indeed will pass at any time in the foreseeable future. Indeed, a quick glance at any newspaper yields the contrary conclusion.”

The Argument

“Facebook has coupled its acquisition strategy with exclusionary tactics that snuffed out competitive threats,” the states said in their suit, “and sent the message to technology firms that, in the words of one participant, if you stepped into Facebook’s turf or resisted pressure to sell, Zuckerberg would go into ‘destroy mode,’ subjecting your business to the ‘wrath of Mark.’” In addition to Facebook’s chief executive, Mark Zuckerberg, the states specifically referred to the company’s purchases of Instagram in 2012 and WhatsApp in 2014.

The Opinion

Judge Boasberg noted that the states’ suit, “which seeks, in the main, to have Facebook divest one or both companies — was not filed until December 2020.” He added, “The court is aware of no case, and plaintiffs provide none, where such a long delay in seeking such a consequential remedy has been countenanced in a case brought by a plaintiff other than the federal government.” (A doctrine, known as laches, that “precludes relief for those who sleep on their rights,” does not apply to the federal government, “to which the federal antitrust laws grant unique authority as sovereign law enforcer.”)

Read more at www.nytimes.com

Show More

Related Articles

Back to top button