The FTC has added more detail to its submission, showing its determination to dismantle Facebook
The judge dismissed the first attempt, but threw the FTC a lifeline: The Federal Trade Commission (FTC) suffered a setback in June, when a federal judge in DC dealt a blow to its attempt to break up Facebook. The lawsuits that were filed in December 2020 called for the divestiture of Facebook and Instagram as well as the need to seek prior approval for future acquisitions. The judge said that the scope of the market lacked clarity, and that the FTC was not clear on the methods it used to calculate Facebook’s market share. However, the judge only dismissed the complaint, not the case, thereby leaving the door open for the FTC to file a new complaint that addressed his concern. Last week it did just that.
The new complaint includes substantial additional information: The amended complaint is 80-pages long compared to the previous 53. It now has additional metrics to substantiate the argument of Facebook’s monopoly power (including data used by Facebook itself in internal presentations). These show Facebook’s share of time spent by users of apps providing personal social networking services in the US has exceeded 80% since 2012. The shares of monthly and daily active users have exceeded 65% and 70% since 2012, respectively. The complaint now also makes greater attempts to uncover Facebook’s ‘killer acquisitions’ strategy. For example, the evaluation of WhatsApp at $19bn for a company with very little revenue is seen as reflective of the future threat it would have posed.
Mergers are now facing significantly more scrutiny: While it is not yet clear whether the refiled complaint will be sufficient to address the concerns of the judge in his first ruling, it shows that the FTC has no intention of backing down. This is perhaps expected now that the FTC is led by Lina Khan, a strong advocate of breaking up monopolies. When the FTC first filed its lawsuits, Facebook called them “revisionist history” and said that undoing them would send the message that “no sale will ever be final”. These are valid points, but they may not be sufficient at a time when antitrust authorities around the world are intensifying their scrutiny of Big Tech acquisitions, and policymakers want to lower the threshold at which these are considered harmful for competition.
