U.S. District Judge James Boasberg tossed the Federal Trade Commission's antitrust complaint against Facebook. This was in an attempt to curb the power of Facebook and Big Tech overall. He also dismissed a multistate suit brought by New York against Facebook. This was mainly because they waited too long for their claims to be pursued. Boasberg ruled in favor of the FTC's legal and factual claims. While Boasberg's ruling allows the FTC the right to file a new suit, it is immediately seen as severely hampering the agencys efforts to unwind Facebooks acquisitions in Instagram and WhatsApp, and change its business practices. This is not the end of the world. The FTC has the authority to continue its lawsuit against Facebook and challenge its monopolistic conduct. The FTC has the opportunity to reframe its case and expand its case against Facebook by being dismissed.AdvertisementAdvertisementAdvertisementThe FTC filed a lawsuit in December 2020 alleging that Facebook had improperly maintained its monopoly on personal social networking services. Two types of practices were the focus of the FTC complaint. The first was that Facebook acquired emerging competitors Instagram and WhatsApp to protect its monopoly in 2012 and 2014. These services were rapidly growing on mobile devices which was where Facebook was most vulnerable to being challenged. Facebook also restricted access to APIs, which allow services and apps to interoperate with Facebook's platform. Facebook refused to share APIs with apps or services that were competing with Facebook's core functionality, or with rival social networks.Boasberg granted Facebook's motion to dismiss Monday. He cited multiple deficiencies in FTCs complaint. His order merits special attention because of two aspects. The judge found that the FTC didn't present sufficient facts to prove that Facebook holds monopoly in the personal social network services market. This is crucial for the FTC's monopolization lawsuit to succeed. First, the judge stated that the FTC failed to provide sufficient facts to show that Facebook holds a monopoly in the personal social networking services market. The FTC can only refuse to share APIs if it meets a three-part restrictive test. Boasberg stated that the FTC needed to prove that Facebook ended a profitable and pre-existing course of dealing between the monopolists and their rival. They also had to show that they were willing to sacrifice short-term profits in order to attain an anti-competitive goal.AdvertisementAdvertisementIt is a difficult decision by the judges. First, market share determination is very fact-intensive. This is not usually something that can be resolved in the pleadings. Through judicial discovery, parties have the chance to develop and refine their market shares. Boasberg's decision to dismiss the case was premature and incorrect at an early stage. He should have assumed the facts in the complaint were true. The judge also applied a very restrictive interpretation to refusal-to-deal law. When can a monopolist do business with its competitors? He stated that it was almost never. The judge ruled that Facebook's API sharing policies and practices were legal, relying on promonopoly decisions from lower courts while ignoring or narrowly reading older Supreme Court precedents.AdvertisementThe FTC still has options to move forward with its case against Facebook, despite Monday's loss. Boasberg did not dismiss the FTC's complaint. He allowed the FTC to file an amended complaint within 30 day.However, the FTC has another option. The FTC could file an administrative complaint to litigate the case at home at the FTC instead of filing it in federal court.What is the significance of the forum? Boasberg claimed that he was applying current legal standards as set forth in the Sherman Antitrust Act. Boasberg's legal reasoning was at least partially based in case law and judicial hostility towards monopolization lawsuits. Recent decisions by the Supreme Court have loosened the Sherman Act's substantive anti-monopoly provisions.AdvertisementAdvertisementSince President Biden's inauguration, the Federal Trade Commission has seen significant changes.The FTC can initiate administrative litigation to avoid the monopoly-friendly caselaw and rely on the wider substantive scope and prohibition on unfair competition of the Federal Trade Commission Acts. This gives the commission a greater statutory authority before its administrative law judge. According to the Supreme Court, the FTC can interpret unfair methods of competition and challenge conduct that violates the Sherman Act or other antitrust laws. However, if the FTC chooses to proceed in federal court, it has greater remedial power than federal courts.AdvertisementSince President Biden's inauguration, the FTC has seen significant changes. In December, the FTC was led by a Republican majority. It now has a Democratic majority, led by Lina Khan, the newly appointed Chair. Already, it has signaled a shift of policy. It is important to note that the FTC will restore its unfair methods of competition authority on Thursday and revoke a 2015 policy statement which narrowly defined this power.AdvertisementThe FTC is able to expand and refine the lawsuit against Facebook with the help of three Democrats who are similar to it on the five-member Commission. It can also use the Commission to announce new restrictions for monopolists. It should explain how it calculated the 60%+ market share in Boasberg's complaint, and continue to fight for the halt to Facebooks acquisitions. The FTC Act could allow them to go even further. Antitrust law provides that monopolists are subjected to special rules that don't apply to nonmonopolists. The FTC could find that Facebook and other dominant companies engage in unfair competition when they refuse or deny to deal with competitors, such as by refusing APIs sharing, in order to maintain their dominance over new markets or extend it.AdvertisementThrough the new administrative suit, the FTC could also target surveillance advertising by Facebook and many other companies. Boasberg pointed out that while Facebook's data-collection practices and -use practices are under increasing scrutiny, they are not being the subject of this new administrative lawsuit. Commissioner Rohit Chopra stated that Facebook's business model relies on ongoing and large-scale privacy invasionstargeting ads that track our online activities and more offline. This case could be used by the FTC to curtail surveillance-advertising practices at Facebook, Google and other digital companies.FTC has an opportunity to take advantage of Monday's dismissal by the judge of its Facebook complaint. FTC may even have received a favor from the judge. Instead of filing a surgical antitrust lawsuit against Facebook, FTC could instead use its broad statutory powers to declare rules of fair competition for Monopolists and restrain the surveillance advertising that has become a part of everyday life.
