Facebook is asking a federal judge to dismiss landmark antitrust suits against the company, arguing that its “innovative free products deliver value” to consumers and that there’s no evidence it behaved anticompetitively or broke the law.
The Federal Trade Commission and almost every state in the country filed a pair of lawsuits in December arguing that Facebook abused its market power when it acquired rival firms, most notably WhatsApp and Instagram, and thus prevented competitors from presenting a more privacy-conscious alternative to consumers.
“Facebook’s actions to entrench and maintain its monopoly deny consumers the benefits of competition,” FTC Bureau of Competition Director Ian Conner said at the time. “Our aim is to roll back Facebook’s anticompetitive conduct and restore competition so that innovation and free competition can thrive.”
“No government lawsuit similar to this one has been brought in the 130-year history of the Sherman Act,” Facebook claims in its motion to dismiss the FTC suit. Because the mergers were once approved, Facebook’s legal argument goes, they must now be permitted to remain intact because they cannot be violating the law.
Specifically, however, Facebook alleges that the FTC failed to build a case because it does not allege a “plausible relevant market” that Facebook could be monopolizing. While the FTC defines the segment as “personal social networking,” Facebook instead argues that it is primarily an advertising business and that the advertising market is “relentlessly competitive.”
Have it both ways?
Facebook dismisses claims that its acquisitions of a “small photo-sharing service” (Instagram, $1 billion, 2012) or “a messaging-only service” (WhatsApp, $16 billion, 2014) could have been anticompetitive because neither company matched Facebook toe-to-toe, and the FTC allowed both transactions to proceed at the time.
Facebook also dismisses out of hand evidence found during a congressional investigation showing that Facebook CEO Mark Zuckerberg had explicitly determined the Instagram acquisition could help the company neutralize a nascent competitor.
“Lacking facts to establish either unlawful conduct or harm to consumers, the FTC attempts to bolster its claims with a grab-bag of selectively quoted internal emails and messages from Facebook executives, which are offered to show that Facebook was concerned about competitive threats from Instagram and WhatsApp,” Facebook writes. “The FTC conflates such sound bites with pertinent facts … but conclusory rhetoric and selective quotations reflecting Facebook’s intense focus on addressing all manner of competitive threats are all the FTC has.”
Therefore, the filing concludes, the FTC not only failed to make a case but also has no authority to maintain the suit, because Facebook is not “violating or about to violate” antitrust law.
The states likewise have no standing, Facebook argues in its motion (PDF) to have that case dismissed, as the attorneys general filed on behalf of their citizens. Additionally, the states waited too long to act and “Facebook would be unfairly prejudiced if the case were allowed to proceed,” Facebook argues.