The suit submitted Thursday contains the same overall arguments as the original, saying that Facebook’s acquisitions of Instagram and WhatsApp were made to create a “moat” around its monopoly in social networking. But the updated suit is nearly twice as long and includes more facts and analysis that the agency says better support the government’s allegations.
“Facebook lacked the business acumen and technical talent to survive the transition to mobile,” Holly Vedova, the acting director of the bureau of competition at the agency, said in a statement. “After failing to compete with new innovators, Facebook illegally bought or buried them when their popularity became an existential threat.”
Facebook responded on Twitter, “We are reviewing the FTC’s amended complaint and will have more to say soon.”
The agency had to refile the case after the judge overseeing it said in June that the government had not provided enough evidence that Facebook was a monopoly in social networking. The judge’s decision, and a similar one he made in a case against the company brought by more than 40 states, dealt a stunning blow to regulators’ attempts to rein in Big Tech.
His decision presented the first major test for Lina Khan, the FTC chair, who was only days into her role at the time. Khan represents a wave of new thinking about the industry among administration officials and many lawmakers, arguing that the government needs to take far more aggressive action to stem the power of technology giants like Facebook, Google, Amazon and Apple. President Joe Biden has appointed multiple regulators with similar aims, and lawmakers proposed updates to antitrust laws to target the power of technology companies.
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The criticisms of the first version of the Facebook case levied by the judge, James Boasberg of the District Court of the District of Columbia, showed the steep challenges regulators face. Although the companies dominate the markets they are in — social media, in the case of Facebook — the courts often look at whether prices are rising as an indication of monopolization. Facebook’s most popular services are free.
“No one who hears the title of the 2010 film ‘The Social Network’ wonders which company it is about,” Boasberg wrote. “Yet, whatever it may mean to the public, ‘monopoly power’ is a term of art under federal law with a precise economic meaning.” He instructed the FTC to back up claims that Facebook controlled 60% of the market for “personal social networking” and that it blocked competition.
Khan then faced a choice on how to handle Boasberg’s decision. One option was to drop the case entirely, while another was to expand it with even broader accusations. Instead, she took more of a middle ground, resubmitting the suit with greater detail and a more sweeping narrative of the company and what the agency says is a pattern of anticompetitive behavior since Mark Zuckerberg co-founded it while he was a student at Harvard in 2004.
Facebook has filed a petition for Khan to recuse herself from the agency’s case, saying her work on a House investigation into platform monopolies shows a bias against the company. Khan is not expected to recuse herself.
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