On 29th June, a US District Court summarily dismissed two antitrust cases brought against Facebook, one by the Federal Trade Commission (FTC) and the other by 46 individual States. The court ruled that the states’ case which sought to challenge Facebook’s acquisitions of Instagram in 2012 and Whats App in 2014 were out of time. It dismissed the FTC case which claimed that Facebook had illegally monopolised the social media market due to a lack of evidence. The judge, however, gave the FTC 30 days to file an amended complaint providing more details in support of its claim. The Court also rejected Facebook arguments that the FTC lacked the proper authority to challenge its Instagram and Whats App acquisitions.
The FTC issued proceedings against Facebook in December 2002. It alleged that “no other social network of comparable scale exists in the United States.” The FTC claimed that Facebook has had monopoly power since at least 2011. However, the FTC defined the relevant market very narrowly, excluding professional social networks like LinkedIn and video streaming players such as YouTube.
The judgement was extremely critical of the FTC case stating that it had provided insufficient evidence to support its claim that Facebook enjoyed a dominant position in the relevant market stating: “It is almost as if the agency expects the Court to simply nod to the conventional wisdom that Facebook is a monopolist,” The judgement also states: “The FTC’s Complaint says almost nothing concrete on the key question of how much power Facebook actually had, and still has, in a properly defined antitrust product market”.
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The judgement is clearly a significant setback to Government attempts to regulate Facebook’s activities. Various commentators have argued that the US courts in a series of judgements over the past 30 years have steadily rolled back the scope of the antitrust laws, particularly Section 2 of the Sherman Act which outlaws monopolisation (abuse of dominance under EU competition law), fuelling growing demands for Congress to pass new legislation. The Sherman Act dates back to 1890 and it is argued by some that it is not suitable to address competition issues that may arise in digital markets.
Market definition is complicated, particularly in the case of digital markets. Nevertheless, the Court’s ruling that the FTC had failed to put forward evidence that Facebook had substantial market power in a properly defined antitrust product market is a strong rebuke.