Facebook on Monday again asked a federal judge to throw out the Federal Trade Commission’s antitrust lawsuit, arguing that the agency still has “no valid factual basis” showing that the social network is an illegal monopolist, in one of the most high-profile competition cases in decades.
In the filing, the company argues that the agency’s amended August complaint relies on “guesswork rather than facts” in its claims about Facebook’s limited market share, contending that the filing should have the same fate as the agency’s initial Facebook antitrust suit and be dismissed. The company is seeking a repeat of the major victory it scored in June when a federal judge dismissed a pair of twin antitrust lawsuits challenging Facebook and forced the FTC to refile an amended version of its case with more evidence.
In the bolstered version of its case, the FTC argued that Facebook should not be compared to popular public-facing social apps such as TikTok and YouTube. Instead it said that Facebook’s most relevant rival is Snapchat, which has tens of millions fewer monthly users than either Facebook or Instagram.
Facebook on Monday sought to challenge the agency’s argument that the company dominates a narrow market of social networks. Facebook called the FTC’s argument “a litigation-driven fiction at odds with the commercial reality of intense competition,” citing TikTok’s recent rise.
“The FTC’s fictional market ignores the competitive reality: Facebook competes vigorously with TikTok, iMessage, Twitter, Snapchat, LinkedIn, YouTube, and countless others to help people share, connect, communicate or simply be entertained,” Facebook spokesman Chris Sgro said in a statement.
Facebook’s refiling highlights the regulatory challenges the company is facing on multiple fronts in Washington. Facebook faces this competition challenge just a day before Frances Haugen, a former employee known as the Facebook “whistleblower,” is scheduled to testify before Congress about internal company research she exposed, which she says proves Facebook prioritized profits and growth over users’ safety. Her lawyers have filed eight complaints with the Securities and Exchange Commission, which can bring charges against companies suspected of misleading investors. The SEC has not responded to requests for comment on the complaints.
Meanwhile, Facebook is still responding to the antitrust lawsuit, which amounts to perhaps the most existential regulatory threat to Facebook’s business in the company’s 17-year history. If the FTC is successful in court, Facebook could be forced to sell off competitors it has acquired that have been key to its success, including its fast-growing WhatsApp and Instagram services. The agency has argued that Facebook sought to neutralize nascent competitors by gobbling them up through an “anticompetitive acquisition strategy.”
In its amended complaint, the FTC sought to define Facebook’s market dominance by relying on data about the amount of time people spent on Facebook from the commercial data company ComScore. Facebook argues, however, that is “legally insufficient” because the data does not purport to measure the amount of time people spend on using Facebook’s services or Snap for personal social networking.
Charlotte Slaiman, competition policy directory at the consumer advocacy group Public Knowledge, said that Facebook’s argument that the FTC hadn’t made its case was premature for the stage in the complaint process.
“They are really trying to hold the FTC to a standard that is higher than the real legal standard for the complaint stage,” she said in an interview. “Facebook is in the best position to have this very detailed market data that they claim the FTC needs to get past this early stage.”
She noted that if the case advances to the discovery phase, the FTC may be able to then force Facebook to disclose data to support its market definition.
The case is widely being watched as a gauge of Washington regulators’ ability to hold tech companies to account, and whether new Federal Trade Commission Chairwoman Lina Khan can implement her aggressive vision of antitrust enforcement in a court system that for decades has held a relatively narrow view of antitrust harm. The judge’s dismissal of the FTC’s initial case, which was brought under the Trump administration, was a major setback for the agency.
The Facebook complaint comes amid a broader debate in Washington over whether existing competition laws can adequately address the unique market dynamics in the tech industry, where companies often offer their services for free. The House Judiciary Committee advanced a package of tech-focused antitrust bills in June, and senators are working on introducing similar bills.
Facebook also argued in its complaint that the case should be dismissed because the FTC’s vote to authorize the amended lawsuit was “invalid.” Facebook had called for Ms. Khan to recuse herself from the case because of her previous criticism of the company in her work on the House antitrust subcommittee’s investigation into tech giants’ power. Ms. Khan was the tiebreaking vote to advance the amended filing, the company argues.
The FTC said in a blog post in August that its Office of General Counsel reviewed Facebook’s recusal petition, but it found it to be invalid. The agency did not immediately respond to a request for comment on the dismissal.
First Published: October 4, 2021, 11:14 p.m.
Updated: October 4, 2021, 11:15 p.m.
