A US judge has denied Facebook’s attempt for a second time to dismiss the antitrust lawsuit brought by the US Federal Trade Commission seeking to force the social media company to unwind its acquisitions of Instagram and WhatsApp.
“Second time lucky?” began the opinion on Tuesday from Judge James Boasberg in Washington, who concluded that the lawsuit, which accuses Facebook of conducting a “course of anti-competitive conduct”, could proceed.
The rejection of Facebook’s motion was a victory for the FTC after its original lawsuit was dismissed by Boasberg last year.
At the time, the judge said the agency had “failed to plead enough facts to plausibly establish” that the company had monopoly power over the social network market and employed a “buy or bury” approach to surmount its rivals.
However, he gave the FTC the chance to amend its complaint, which it did, with added detail to support its assertions.
“The facts alleged this time around to fortify those theories . . . are far more robust and detailed than before, particularly in regard to the contours of defendant’s alleged monopoly,” Boasberg wrote in his opinion.
“The agency has also explained that Facebook not only possesses monopoly power, but that it has wilfully maintained that power through anti-competitive conduct — specifically, the acquisitions of Instagram and WhatsApp.”
The judge also dismissed the argument by Facebook, which has since changed its corporate name to Meta, that the amended complaint should not have been authorised because Lina Khan, FTC chair, participated in the regulator’s vote.
The company argued that Khan — a prominent critic of Big Tech who was appointed by President Joe Biden to lead the FTC just weeks before Boasberg’s original ruling — demonstrated prejudgment against the company through her previous writings as an academic.
“Although Khan has undoubtedly expressed views about Facebook’s monopoly power, these views do not suggest the type of ‘axe to grind’ based on personal animosity or financial conflict of interest that has disqualified prosecutors in the past,” the judge wrote.
However, Boasberg said he would not let the FTC pursue allegations that the company changed its platform policies to cut off services to rivals because the conduct was too far in the past.
Holly Vedova, the director of the FTC’s bureau of competition, said: “FTC staff presented a strong amended complaint. Now that the district court denied Facebook/Meta’s motion to dismiss, we look forward to moving ahead with the trial.”
Facebook said in a statement: “We’re confident the evidence will reveal the fundamental weakness of the claims. Our investments in Instagram and WhatsApp transformed them into what they are today. They have been good for competition, and good for the people and businesses that choose to use our products.”
The company also noted that the judge had narrowed the scope of the lawsuit to reject the allegations around its platform policies and said the ruling acknowledged that “the agency faces a ‘tall task’ proving its case regarding two acquisitions it cleared years ago”.
Doug Melamed, a law professor at Stanford University, said: “The core problem with the initial complaint was that the allegations regarding the market power element of the case were in some ways unintelligible.
“The amended complaint added lots of specifics and thus cured the problems in the first complaint. It was rather obvious when the amended complaint was filed that it would survive a motion to dismiss.”
But he added that the ruling should not be read as a sign that the FTC will ultimately prevail in what is likely to be a difficult case to prove. “The complaint raises many difficult factual issues, and the judge noted that the FTC might not prove all of the facts necessary to prevail in the case,” he said.
Facebook is required to file its response to the complaint by January 25.
