FTC says Facebook ‘bought and buried’ rivals in renewed antitrust fight

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FILE PHOTO: A Facebook logo is displayed on a smartphone in this illustration
FILE PHOTO: A Facebook logo is displayed on a smartphone in this illustration taken January 6, 2020. REUTERS/Dado Ruvic

August 19, 2021

By Diane Bartz and Nandita Bose

WASHINGTON (Reuters) -The U.S. Federal Trade Commission refreshed its antitrust case against Facebook Thursday, adding more detail on the accusation the social media company crushed or bought rivals and once again asking a judge to force the social media giant to sell Instagram and WhatsApp.

At 80 pages, the new complaint is significantly longer than the original, 53-page complaint and includes additional data and evidence intended to support the FTC’s contention that Facebook is a monopolist. An expanded portion of the complaint argues that Facebook dominates the U.S. personal social networking market.

The FTC voted 3-2 along party lines to file the amended lawsuit and denied Facebook’s request that agency head Lina Khan be recused. Khan participated in filing the new complaint.

The agency also repeated its request that the court order Facebook to sell Instagram, which it bought in 2012 for $1 billion, and WhatsApp, which it bought in 2014 for $19 billion.

The FTC accused Facebook of an “illegal buy or bury scheme to crush competition” in the headline of the press release on its complaint https://www.ftc.gov/news-events/press-releases/2021/08/ftc-alleges-facebook-resorted-illegal-buy-or-bury-scheme-crush.

Facebook said that it would continue to fight the lawsuit.

“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,” a company spokesman said. “Our acquisitions of Instagram and WhatsApp were reviewed and cleared many years ago, and our platform policies were lawful.”

The FTC’s high-profile case against Facebook represents one of the most significant challenges the agency has brought against a tech company in decades, and is being closely watched as Washington aims to tackle Big Tech’s extensive market power.

Facebook shares were little changed at $355.67 in afternoon trading.

“Despite causing significant customer dissatisfaction, Facebook has enjoyed enormous profits for an extended period of time suggesting both that it has monopoly power and that its personal social networking rivals are not able to overcome entry barriers and challenge its dominance,” the amended complaint said.

In an effort to show Facebook’s dominance in personal social networking, the FTC’s complaint differentiated it from short video app TikTok and sites like Twitter, Reddit and Pinterest that it said are not focused on connecting friends and family.

The amended complaint comes after Judge James Boasberg of the U.S. District Court for the District of Columbia said in June that the FTC’s original complaint filed in December failed to provide evidence that Facebook had monopoly power in the social-networking market.

The new complaint expands the story that the FTC wants to tell about how Facebook was at first open to apps on the platform but then clamped down, said John Newman, who teaches at the University of Miami School of Law.

“I think the (new) complaint clearly responds to Judge Boasberg’s concerns in the first complaint,” said Newman. “There aren’t huge new bombshells in here.”

A second antitrust expert said he believed the court would have a hard time ordering the sale of Instagram or WhatsApp because they were purchased years ago.

“It is a better complaint because it states with much more specificity that Facebook has dominance in social networking,” added Seth Bloom of Bloom Strategic Counsel.

Alex Harman of Public Citizen said, in a reference to the new FTC Chair Khan, that the refiling of the case “should be a message to Facebook and other monopolists that there is a new sheriff in town and the party is over.”

(Reporting by Diane Bartz, Nandita Bose and David Shepardson in WashingtonAdditional reporting by Elizabeth Culliford in LondonEditing by Diane Craft, Matthew Lewis and Chizu Nomiyama)

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