On Thursday, as part of its ongoing federal antitrust lawsuit against Facebook, the Federal Trade Commission (FTC) filed an amended complaint against the company. The 80-page document argues the social media giant has become a monopoly that has "resorted to an illegal buy-or-bury scheme to maintain its dominance." The lawsuit points out that Facebook's business plan has remained true to a deeply rooted view within the company expressed by Mark Zuckerberg in 2008 of "it is better to buy than compete."
The FTC's complaint, filed in the U.S. District Court for the District of Columbia, asserts that after repeatedly failing to develop innovative mobile features for its network, Facebook instead unlawfully acquired its innovative competitors with popular mobile features that succeeded where Facebook's attempts fell apart. The complaint accuses the tech oligarchy of attracting developers to its platform with the intent of surveying them for signs of success and then burying them when they became competitive threats. This tactic has left Facebook with little serious competition and allowed the company to "hone a surveillance-based advertising model and impose ever-increasing burdens on its users." Holly Vedova, FTC Bureau of Competition Acting Director, explained:
"Facebook lacked the business acumen and technical talent to survive the transition to mobile. After failing to compete with new innovators, Facebook illegally bought or buried them when their popularity became an existential threat. This conduct is no less anti-competitive than if Facebook had bribed emerging app competitors not to compete. The antitrust laws were enacted to prevent precisely this type of illegal activity by monopolists. Facebook's actions have suppressed innovation and product quality improvements. And they have degraded the social network experience, subjecting users to lower levels of privacy and data protections and more intrusive ads. The FTC's action today seeks to put an end to this illegal activity and restore competition for the benefit of Americans and honest businesses alike."
The amended complaint comes after a previous complaint—which included 48 states and districts led by the New York Attorney General—filed by the FTC on Dec. 9, 2020, was thrown out in June by a federal court. In reaching his decision to dismiss the complaint, Judge James E. Boasberg remarked, "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. 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%).'" Still, Boasberg wrote the agency could refile its case with more substantial arguments, giving it a deadline of Aug. 19, 2021. At the time, Senator Josh Hawley, R-MO, tweeted of the court's decision:
This is deeply disappointing from the court, which acknowledged @Facebook massive market power but essentially shrugged its shoulders. Bad result for the American people.
The FTC's decision to file the case was approved in a 3-2 vote, with the agency's two Republicans, who opposed the suit when it was first filed in December, attempting to block the move. Commissioner Christine Wilson also issued a dissenting statement. The revised complaint includes additional data and evidence to support the FTC's claim that Facebook is a "monopolist that abused its excessive market power to eliminate threats to its dominance." The amended complaint asserts that Facebook continues to monitor the industry for rival threats to its personal social networking monopoly while making it difficult for users to switch to another personal social networking provider.
Facebook spokesperson Christopher Sgro issued a statement in response to the FTC's decision to move forward with the lawsuit, which seeks to force Facebook to divest from major assets, "including but not limited to WhatsApp and Instagram," competitors the company acquired years ago. Calling the case "meritless," the statement asserted, "There was no valid claim that Facebook was a monopolist—and that has not changed. Our acquisitions of Instagram and WhatsApp were reviewed and cleared many years ago, and our platform policies were lawful. The FTC's claims are an effort to rewrite antitrust laws and upend settled expectations of merger review, declaring to the business community that no sale is ever final."
The social media monster—who, along with Twitter and Google, faces a class-action lawsuit filed by President Trump—petitioned that FTC chair Linda Khan recuse herself from the case due to her past criticism of Facebook. Still, the agency denied the request, noting that its Office of General Counsel "carefully" reviewed the company's petition but dismissed it after finding Facebook would have appropriate due process protections in court regardless of Khan's involvement. Facebook also faces heat from two top Republicans on the House Judiciary and Oversight Committees, who are demanding more information about the social media oligarchs' role in “censoring” content about the pandemic, including the origins of COVID-19.
In urging the court to compel Facebook to divest from significant assets, the FTC states the decision would "restore the competition that would exist" in place of the platform's alleged monopolistic business practices. Additionally, to ensure Facebook doesn't recommence its unethical strategies, the government wants the tech giant to give "prior notice and prior approval" for any future mergers and acquisitions and to file "periodic compliance reports with the FTC." Facebook has until October 4, 2021, to respond to the FTC's amended complaint.
