Analysis
U.S Federal Court Dismisses FTC Antitrust Suit Seeking Breakup Of Facebook Over ‘Anticompetitive Practices'
- A federal court in U.S on Monday (Jun 28) dismissed lawsuits by the Federal Trade Commission (FTC) and 48 U.S. states seeking to break up Facebook over its engagement in ‘anticompetitive practices.’
- In Dec last year, FTC and 48 other states had filed an antitrust lawsuit against social-media behemoth, which, if successful, could have led to the court-ordered breakup of the company,
- The FTC lawsuit accused the social-media giant of buying and freezing out small startups to choke competition. The suit sought to end Facebook’s control over WhatsApp and Instagram and called for unwinding its acquisitions of WhatsApp and Instagram, two of its landmark deals.
- Buoyed by the favourable legal ruling, Facebook’s shares closed up 4.2% at $355.64 helping the company close above $1 trillion in market capitalization for the first time.
Facebook Chief Executive Officer Mark Zuckerberg.
A federal court in U.S on Monday (Jun 28) dismissed lawsuits by the Federal Trade Commission and 48 U.S. states seeking to break up Facebook over its engagement in ‘anticompetitive practices.’
In Dec last year, FTC and 48 other states had filed an antitrust lawsuit against social-media behemoth Facebook.
FTC Lawsuit
The FTC lawsuit accused the social-media giant of buying and freezing out small startups to choke competition. The suit sought to end Facebook’s control over WhatsApp and Instagram and called for unwinding its acquisitions of WhatsApp and Instagram, two of its landmark deals.
“Facebook recognizes that its continued ownership and operation of Instagram and WhatsApp…neutralizes their direct competitive threats,” the FTC lawsuit stated.
“Facebook continues to monitor the industry for competitive threats, and likely would seek to acquire any companies that constitute, or could be repositioned to constitute, threats to its personal social networking monopoly.” the suit added.
The FTC also sought “divestiture of [Facebook] assets, divestiture or reconstruction of businesses (including, but not limited to, Instagram and/or WhatsApp), and such other relief sufficient to restore the competition that would exist absent the conduct alleged in the Complaint.”
“Facebook’s actions to entrench and maintain its monopoly deny consumers the benefits of competition,” said Ian Conner, director of the FTC’s Bureau of Competition. “Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive.”
U.S District Court Dismisses The Lawsuit
On Monday (Jun 28), Judge James E. Boasberg of the U.S. District Court for the District of Columbia dismissed the suit. He ruled that FTC was unable to detail its methods for concluding that Facebook held a dominant market share of social networking services.
“The FTC has failed to plead enough facts to plausibly establish a necessary element of” its claims, “namely, that Facebook has monopoly power in the market for Personal Social Networking (PSN) Services,” Boasberg wrote.
“The Complaint contains nothing on that score save the naked allegation that the company has had and still has a ‘dominant share of th[at] market (in excess of 60%).'” he ruled.
Boasberg also dismissed an antitrust suit brought by 48 state attorneys general, led by New York attorney general Letitia James.
Buoyed by the favourable legal ruling, Facebook’s shares closed up 4.2% at $355.64 helping the company close above $1 trillion in market capitalization for the first time.
