A US federal judge threw out two antitrust complaints against the social media giant Facebook on Monday in a major loss for federal and state attorneys.
The cases were filed concurrently, one by the attorneys general for 48 states and the other by the Federal Trade Commission, and were seeking to break up what they perceived as a monopoly by Facebook. They claimed that Facebook had monopolized the social media market through their acquisition of WhatsApp and Instagram, which was coupled with their platform policies that render the services incompatible with other social media platforms.
United States District Judge for the DC Circuit James Boasberg dismissed the suits for “failure to state a claim upon which relief can be granted.” Boasberg pointed to Bell Atlantic Corp. v. Twombly, which itself is a an antitrust case. Twombly set the standard that there must be sufficient facts on the face of a complaint to avoid dismissal for failure to state a claim.
Quoting Twombly, Boasberg reiterated that “[A] district court must retain the power to insist upon some specificity in pleading before allowing a potentially massive factual controversy to proceed.” He continued, pointing to the failure by prosecutors to show any specific facts that would support their claim: “The FTC’s Complaint says almost nothing concrete on the key question of how much power Facebook actually had, and still has, in a properly defined antitrust product market. It is almost as if the agency expects the Court to simply nod to the conventional wisdom that Facebook is a monopolist.”
Monopolies are not simply companies with a lot of power, as they are colloquially understood, but the word is a term of art with a specific economic and legal meaning. A monopoly is “the power to profitably raise prices or exclude competition in a properly defined market.”
According to Boasberg, the plaintiffs fell far short of the Twombly standard in asserting that Facebook is an illegal monopoly, saying, “To merely allege that a defendant firm has somewhere over 60% 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 FTC has therefore fallen short of its pleading burden.”
In spite of the dismissal, the case could continue. The FTC has thirty days to file an amended complaint, addressing the problems pointed out by Boasberg, which may allow for the case to move forward. At this time, the FTC has not stated whether they intend to proceed with their lawsuit against Facebook.
