Facebook’s Antitrust Dismissal Shows the Slow Grind of Big Tech Regulation

Facebook took home a small win on Monday, but the social networking giant is far from out of the woods yet, especially internationally, as growing regulatory pressure continues to circle Big Tech. U.S. District Court Judge James Boasberg dismissed separate antitrust lawsuits filed against Facebook by the Federal Trade Commission and 48 State Attorneys General last December. The FTC has 30 days to amend its lawsuit and said it is "assessing the best option forward." Judge Boasberg dismissed the Attorneys General suit altogether. “We are pleased that today’s decisions recognize the defects in the government complaints filed against Facebook," the social networking giant 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.” Google Faces More Antitrust Scrutiny, This Time From the European Commission Facebook’s dominance in the messaging application space was never going to be the battle that tipped the scales. Sources Adweek spoke with are cautious not to overstate the significance of Monday’s ruling. “This still feels like we’re early on in the inevitable rise in accountability for the company, this signals how long it’s going to take,” said Jason Kint, CEO at trade body Digital Content Next. Kint cautioned against overstating that the outcome hiked Facebook’s market valuation beyond $1 trillion, a movement of 4%. While not immaterial, that fluctuation is also not unusual for Facebook. A market lacking in definition Concerns around the urgency of governments’ grasp on new digital markets are historic and well-worn. Extrapolating information from this ruling to ongoing antitrust cases, of which there are many, is a bit like comparing apples to oranges. The allegations against Facebook run the gamut from market share, acquisitions and dominance over personal social networking. Cases alleging Google’s monopolistic behavior deal with its ad targeting tools and capabilities. Still, how judges will apply traditional antitrust concepts to entirely new market dynamics is a worry, since a lot of Monday’s dismissal was due to the definition of personal social networking. “That is both a real legal problem and an absurd practical outcome,” David Chavern, president and CEO at News Media Alliance, told Adweek. But the definition of the market is key in market dominance cases, added Eitan Jankelewitz, partner in the Digital Media Group at law firm Sheridans. A company's dominance hinges on its size relative to the market. “A large ad-tech business may dominate a particular online marketing channel to the extent that it is a de facto monopolist for that channel,” he said. If the market is defined as all forms of online advertising, then it’s much larger, as a result, “the ad-tech business’ proportionate market share drops dramatically and arguments about monopoly lose their resonance.” The right to choose This case could also have been a slippery one for the FTC to win because of consumer choice, said Brian Kane, chief operating officer of Sourcepoint, since that’s one parameter often used to validate market dominance claims. In terms of the personal social networking market, or messaging apps, there’s plenty of choice, not to mention challengers like TikTok which have backed Facebook into a corner, fighting for relevance over a younger portion of the market. Still, the drumbeat for global regulation is getting louder, especially under President Biden’s administration. “[Lawsuits] just keep piling up and we expect more scrutiny, not less, to follow,” said director of research at Enders Analysis, Alice Enders. For the FTC to resubmit, the judge is looking for a metric or more detail about how to determine if Facebook is a monopoly. The FTC alleged Facebook "maintained a dominant share of the U.S. personal social networking market (in excess of 60%)" since 2011, but this was too light on detail. Meanwhile, antitrust bills are rolling through congress, inciting reactions from Big Tech execs, imposing new regulations on companies with $600 billion in market cap or annual sales, and so assuming some form of dominance in their field. A thorough, watertight case prevents a greater likelihood for appeal, but whether the FTC can refile with a metric meeting new standards is still an open question. “If they can't then we really have to question whether there are any legal constraints on Facebook's organic growth,” said Chavern, of the News Media Alliance. “The judge did seem more open to constraints on Facebook's acquisitions, which is a good thing.”