FTC Takes Aim at Facebook Again, Files Amended Antitrust Complaint

On the same day that Facebook CEO Mark Zuckerberg appeared on CBS This Morning to tout Oculus From Facebook’s new Horizon Workrooms application as “the future of Facebook,” the Federal Trade Commission took its second shot at altering the future of Facebook. The FTC filed its amended complaint versus Facebook Thursday in the U.S. District Court for the District of Columbia, once again accusing the company of resorting to “an illegal buy-or-bury scheme to maintain its dominance,” by unlawfully acquiring competitors with popular mobile features, as well as luring app developers to its platform and burying them when they became competitive threats. FTC Bureau of Competition acting director Holly Vedova said in a statement, “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. This conduct is no less anticompetitive than if Facebook had bribed emerging app competitors not to compete. The antitrust laws were enacted to prevent precisely this type of illegal activity by monopolists. Facebook’s actions have suppressed innovation and product quality improvements. And they have degraded the social network experience, subjecting users to lower levels of privacy and data protections and more intrusive ads. The FTC’s action today seeks to put an end to this illegal activity and restore competition for the benefit of Americans and honest businesses alike.” “It is unfortunate that despite the court's dismissal of the complaint and conclusion that it lacked the basis for a claim, the FTC has chosen to continue this meritless lawsuit,” Facebook responded in a series of tweets. “There was no valid claim that Facebook was a monopolist—and that has not changed. Our acquisitions of Instagram and WhatsApp were reviewed and cleared many years ago, and our platform policies were lawful. The FTC's claims are an effort to rewrite antitrust laws and upend settled expectations of merger review, declaring to the business community that no sale is ever final. We fight to win people’s time and attention every day, and we will continue vigorously defending our company.” In late June, U.S. District Court Judge James Boasberg dismissed separate antitrust lawsuits filed against Facebook by the FTC and 48 state attorneys general last December, giving the FTC 30 days to amend its lawsuit—an extension was granted later—and dismissing the suit by the attorneys generals altogether. Boasberg was looking for a metric or more detail about how to determine if Facebook is a monopoly. The FTC alleged that 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 for the judge. Two key points in the amended complaint were Facebook’s response to the emergence of the mobile web in the early 2010s and the conditions it imposed on developers using its previously open platform. The FTC cited Zuckerberg as saying, “We’re vulnerable in mobile,” as well as a major shareholder it did not name expressing concern that the company “ran the risk of the unthinkable happening—being eclipsed by another network.” As for platform, Facebook’s policy changes forced developers to agree to conditions that prevented successful apps from emerging as competitors, according to the FTC. The commission alleged that Facebook continues to monitor the industry for competitive threats to its monopoly, writing in its amended complaint that the company is likely to impose anticompetitive conditions on access to its platform or seek to acquire companies it deems to be potential threats, especially when it faces “acute competitive pressures from a period of technological transition.” The FTC is asking the court to require Facebook to divest assets including but not limited to Instagram and WhatsApp, as well as to file periodic compliance reports with the FTC and adhere to any other requirements the court deems necessary. The agency wrote in its amended complaint, “Facebook’s unlawful course of conduct to maintain its monopoly continues today and must be enjoined. Facebook continues to hold and operate the assets it acquired unlawfully and continues to keep them positioned to provide a protective ‘moat’ around its personal social networking monopoly. Moreover, Facebook continues to monitor competitive threats and will seek to acquire or kneecap them unless enjoined.”

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FTC Takes Aim at Facebook Again, Files Amended Antitrust Complaint

The agency accused the social networking giant of continuing to 'acquire or kneecap' potential competitive threats

David Cohen

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David Cohen