WASHINGTON – An antitrust lawsuit against social media giant Facebook brought by dozens of attorneys general, including Pennsylvania Attorney General, which alleged that Facebook eliminated its rivals to corner the market, has been dismissed by a federal judge.
In ruling to dismiss, U.S. District Court for the District of Columbia Judge James E. Boasberg said the plaintiffs hadn’t shown convincingly what social networking is – or prove their claim that Facebook controls over 60 percent of the market share for that service.
Facebook boasts a consumer base of 2.7 million users.
“Personal social networking services are free to use, and the exact metes and bounds of what even constitutes a PSN service – i.e., which features of a company’s mobile app or website are included in that definition and which are excluded – are hardly crystal-clear,” Boasberg said.
“The FTC’s inability to offer any indication of the metric(s) or method(s) it used to calculate Facebook’s market share renders its vague ‘60%-plus’ assertion too speculative and conclusory to go forward.”
However, Boasberg added that since that defect “could conceivably be overcome by re-pleading”, the complaint’s dismissal would only be without prejudice, in order to allow the plaintiffs 30 days’ time to file an amended complaint.
Facebook applauded the ruling.
“We are pleased that today’s decisions recognize the defects in the government complaints filed against Facebook. 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,” the company said in a statement.
In the wake of the ruling, Facebook’s stock market soared past $1 trillion.
The Federal Trade Commission and New York Attorney General Letitia James did not have a comment on the ruling. Meanwhile, the dismissal is seen as a blow to regulators in their attempt to levy control over Silicon Valley.
Attorneys general say Facebook dominates marketplace at consumers’ expense
The antitrust lawsuit was first announced in December by the FTC and James.
“For nearly a decade, Facebook has used its dominance and monopoly power to crush smaller rivals and snuff out competition, all at the expense of everyday users,” James said at the time of filing.
“Almost every state in this nation has joined this bipartisan lawsuit because Facebook’s efforts to dominate the market were as illegal as they were harmful. Today’s suit should send a clear message to Facebook and every other company that any efforts to stifle competition, reduce innovation, or cut privacy protections will be met with the full force of our offices.”
The suit accused Facebook of executing “a systematic strategy” to eliminate its competition through anti-competitive conduct, with an example being its billion-dollar purchases of then-nascent social media apps Instagram in 2012 and WhatsApp in 2014.
Though Facebook CEO Mark Zuckerberg maintained Instagram and WhatsApp would be maintained separately from Facebook upon their acquisitions, the apps have become increasingly integrated in recent years.
Meanwhile, the FTC also brought legal action against Facebook, seeking a forced divestment of those same Instagram and WhatsApp messaging services.
Shapiro said that Facebook’s myriad of illegal actions in creating a monopoly are what landed it in legal hot water.
“This lawsuit is straightforward. We’re alleging that Facebook built a monopoly that, as we speak, is doing all it can to stifle competition, including local media, prey on smaller companies, and punish anyone it can’t buy through cutting off access to services and information. This is not how normal businesses operate; it is how illegal monopolies operate. They are breaking the law and we’re going to stop them in court,” Shapiro said at the time of filing.
Since its debut in 2004, Facebook has become the world’s largest social media network. Its CEO, Zuckerberg, is the fifth-richest individual in the world.
The lawsuit – brought by the attorneys general of 46 states, Guam and the District of Columbia – also accused Facebook of using its gigantic market share to acquire consumer data, make a fortune in advertising revenues and of violating both the Sherman Act and Clayton Act.
The bipartisan coalition of 48 attorneys general collaborated with the FTC in preparing its lawsuit, according to James, but conducted its investigation separately.
U.S. District Court for the District of Columbia case 1:20-cv-03590
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com