A federal judge granted Facebook’s request to dismiss the massive antitrust suit filed by the Federal Trade Commission and 46 states, led by New York Attorney General Letitia James. The judge’s reasoning is instructive, beginning with recognition of how fleeting a market advantage is in technology.
“At the time of the last great antitrust battle in our courthouse — between the United States and Microsoft — Mark Zuckerberg was still in high school,” writes Judge James E. Boasberg of the U.S. District Court of the District of Columbia. “Only after his arrival at Harvard did he launch ‘The Facebook’ from his dorm room. Nearly twenty years later, both federal and state regulators contend, in two separate actions before this Court, that Facebook is now the one violating the antitrust laws.”
Boasberg noted that FTC and the states alleged that Facebook has long had a monopoly in the market for what they call “Personal Social Networking Services.” The suit claimed Facebook maintained that monopoly in violation of Section 2 of the Sherman Act by acquiring Instagram and WhatsApp it believed were well positioned to erode its market position. The FTC and states also saw harm in Facebook policies that prevented interoperability between Facebook and certain other apps that it saw as possible competitors.
Judge Boasberg then neatly slices a judicial samurai sword through these contentions.
“The FTC has failed to plead enough facts to plausibly establish a necessary element of all of its Section 2 claims — namely, that Facebook has monopoly power in the market for Personal Social Networking (PSN) Services,” he writes. “The Complaint contains nothing on that score save the naked allegation that the company has had and still has a dominant share of th[at] market (in excess of 60%).
“Such an unsupported assertion might (barely) suffice in a Section 2 case involving a more traditional goods market, in which the Court could reasonably infer that market share was measured by revenue, units sold, or some other typical metric. But this case involves no ordinary or intuitive market. Rather, PSN 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.
“In this unusual context, 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.
“[E]ven if the FTC had sufficiently pleaded market power, its challenge to Facebook’s policy of refusing interoperability permissions with competing apps fails to state a claim for injunctive relief,” Judge Boasberg writes. “[T]here is nothing unlawful about having such a policy in general.” He also dings the government for acting on a “long-past conduct” with the WhatsApp and Instagram two presidencies ago.
What I find most interesting about his decision are the pains Judge Boasberg takes to note that social media platforms like Facebook are free – and that defining their market boundaries are far from “crystal clear.”
Hardly the stuff of Standard Oil or U.S. Steel.
Reasonable people would relax. This will only intensify the many unreasonable antitrust bills that would amount to a government takeover of American business.