The antitrust case seeking to undo Meta’s acquisitions of Instagram and WhatsApp will go ahead – but it could take several years to resolve
Second time lucky? The opinion of the US District Court for the District of Columbia starts with those very telling three words. Having previously poured cold water on the FTC’s first antitrust suit against Meta, last week the court took a different stance on the revisited complaint submitted by the authority. In June, the FTC’s complaint was dismissed on grounds that the market for social networking services is “hardly crystal clear”, and that the FTC was unable to indicate how it calculated Meta’s market share. Such a failure invalidated the FTC’s assertion that the company holds a 60%+ share in that market, which the judge found too speculative to proceed.
The FTC strengthened its arguments: Despite the initial setback, the FTC had a second roll of the dice, since the court dismissed the complaint but not the case. The FTC restated its theory that Meta maintained a monopoly by acquiring potential competitors and preventing interoperability with apps perceived as nascent threats. This time, it considered the evidence to back it up as “far more robust” with regard to Meta’s monopoly power in the market for personal social networking services, and to the barriers to entry that protect its market share. The new complaint also does a better job of showing that such power was maintained through anticompetitive conduct, including the acquisitions of Instagram and WhatsApp. On one point the court disagrees with the FTC, noting that Meta abandoned its interoperability policies in 2018.
While a boost for the FTC, it’s only the start of what will be a long process: While the court notes that the FTC still faces a “tall task” in proving its allegations, the judge sounded significantly more approving of the FTC’s arguments this time. Importantly, the court is allowing the claim to proceed in a market where the FTC will not be able to demonstrate consumer harm on the basis of price increases, since Meta does not charge for its services. This will be an important test for the business model adopted by many large online platforms, since in most antitrust cases price increase is a key element to determine consumer harm. However, there is still a long way to go. The FTC will have to find evidence of Meta’s anticompetitive behaviour, which could take years. And even in the case of a victory for the FTC, Meta would likely appeal the decision. For comparison, the antitrust case against Microsoft lasted a total of six years between the initial filing and the approved settlement. Cases against Meta in other jurisdictions could well start and finish in less time than this one, as was recently shown with the CMA in the UK ordering to reverse Meta’s acquisition of Giphy. Such interventions are likely to be influenced by any evidence and arguments that emerge in the US as this plays out.
Source: https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2020cv3590-90
