The Federal Trade Commission filed a new antitrust complaint against Facebook Thursday and continued its battle in federal court after a judge dismissed its original claims.
Facebook has until October 4th to respond to the FTC’s amended complaint.
In particular, FTC chairman Lina Khan did not decline to vote on the complaint after Facebook urged her to do so based on her previous critical comments on the industry. In a press release, the agency said that its Office of General Counsel “has carefully examined Facebook’s petition to dismiss Chairwoman Lina M. Khan. The secretariat rejected the petition. “
The commission voted 3-2 in favor of filing the lawsuit, meaning Khan’s participation was critical to bringing the case forward in federal court. In a dissenting statement, Republican Commissioner Christine Wilson said her participation in the vote should not be confused with a call for judgment on the rejection motion and said she would apply relevant law to the facts if the commission examined the petition.
Facebook shares were slightly positive on Thursday afternoon.
The company said in a statement on Twitter Thursday that the FTC’s complaint remains “baseless” and will “continue to vigorously defend our company.”
“The FTC’s allegations are an attempt to rewrite antitrust laws and flip set expectations for the merger review by explaining to the business community that no sale is ever final,” the company said, referring to attempts to reverse its acquisitions from Instagram and WhatsApp to undo.
U.S. District Judge James Boasberg gave the FTC a second chance to advance its claims that Facebook illegally maintained a monopoly after dismissing its first complaint in June.
Boasberg wrote that in its first complaint, the FTC had not defined a plausible market that Facebook was monopolizing and suggesting that its market share was too low. Also, he wrote, under its elected statute, the FTC does not have the authority to bring charges against Facebook for implementing an old policy seven years ago that prevented rivals from accessing its platform.
Boasberg said in order for the FTC to obtain an injunction under that law, it must be clear that an injury is ongoing or is imminent.
The new lawsuit is longer than the original, 80 pages versus 53 pages. But, broadly speaking, it upholds the original’s core arguments, including claims that Facebook used anti-competitive takeovers of Instagram and WhatsApp to bolster its monopoly power, and that it wrongly prevented competitors from accessing its application programming interface or API as well .
The updated complaint retains the same definition of the market that Facebook allegedly monopolized. The FTC calls this market personal social networking services. The agency claims that such services are unique because of their combined use of social graphs to map user connections, features that enable users to interact with personal contacts rather than disseminating information widely, and features that enable users to find each other.
Similar to the previous version, the FTC claims that interest-based social platforms like LinkedIn or the fitness app Strava don’t fit this mold, nor do platforms that are primarily used for streaming videos like YouTube. In contrast to the previous version, this complaint cites TikTok as an example of a platform that does not meet the definition of a personal social networking service, but instead refers to it as a “content distribution and consumption service”. Facebook has repeatedly stated that it regards TikTok as a competitor.
However, the new complaint appears to address some of the judge’s criticisms of the original complaint. For example, the new complaint describes Snapchat as “the next largest provider of personal social networking services in the United States”. Although the FTC identified Snap in its earlier complaint as a company that had attracted Facebook’s “competitive attention”, the judge had criticized the FTC for failing to meet other rivals in the market that were neither shut down nor extreme were small, to be explicitly mentioned. The FTC’s explicit inclusion of Snapchat in the relevant market appears to solve this problem.
The FTC also appeared to be trying to back up its claim of Facebook’s dominance in the relevant market. The judge challenged the way the FTC previously claimed Facebook had “over 60%” market power while saying it was not clear who made up the other 30 to 40%.
In the new version, the FTC details – although the numbers are blacked out on the public record – Facebook’s huge user base and its commitment compared to Snapchat, which the agency claims is “a fraction of the size”. The new version claims that Facebook’s share of monthly active users of apps that offer personal social networking services in the United States has exceeded 65% since 2012 and was at least that high in 2011.
As another example, the FTC describes how the API Access Policy was allegedly anti-competitive, saying that Facebook “made a conscious decision to sacrifice the benefits that otherwise truncated apps, including ad spend, would bring to Facebook” in order to get its monopoly maintain. The judge had previously written that the FTC had to prove that Facebook was implementing the policy at the expense of its own short-term profits.
The judge also dismissed a similar lawsuit by a coalition of attorneys general in June, but refused to give them the same second chance he gave the FTC. New York attorney general Letitia James, who led the coalition, said she would appeal the ruling.
Subscribe to CNBC on YouTube.
WATCH: How US Antitrust Law Works and What It Means for Big Tech
Comments are closed.