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Explained: Why a US court has dismissed FTC lawsuit against Facebook

In December last year, an antitrust lawsuit was filed against Facebook alleging that has harmed competition by buying up smaller companies like Instagram and WhatsApp to squash the threat they posed to its business.

Facebook lawsuitIn December last year, an antitrust lawsuit was filed against Facebook alleging that has harmed competition by buying up smaller companies like Instagram and WhatsApp to squash the threat they posed to its business | Reuters/file

The US District Court for the District of Columbia Monday dismissed a complaint filed by the US Federal Trade Commission (FTC) against social networking giant Facebook that sought to undo the company’s acquisitions of Instagram and WhatsApp. This is being seen as a major blow to the US administration’s antitrust efforts against big-tech companies.

What was the complaint that FTC filed?

In December last year, an antitrust lawsuit was filed against Facebook alleging that has harmed competition by buying up smaller companies like Instagram and WhatsApp to squash the threat they posed to its business. While the suit was filed by the New York attorney general, 47 other state and regional attorneys general joined it. The overarching theme of the lawsuit was that Facebook, which acquired Instagram for $1 billion in 2012 and WhatsApp for $19 billion in 2014, violated antitrust laws by purchasing companies that were potentially on their way to becoming competitors to Facebook in the social media market.

Why was the lawsuit dismissed?

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According to a Reuters report, the US judge said the federal complaints were “legally insufficient”. Judge James Boasberg said the FTC failed to show that Facebook had monopoly power in the social-networking market but said the FTC could file a new complaint by July 29, the report said. He also dismissed a lawsuit by multiple US states saying they waited too long to challenge the acquisitions of Instagram and WhatsApp in 2012 and 2014 respectively.

What is the significance of this decision?

The Joe Biden administration has mounted a massive antitrust campaign against big-tech firms, in addition to the scrutiny these companies are undergoing from various other branches of the government. And while the case was filed in December, this could prompt the first reaction on the issue from the FTC under its new commissioner Lina Khan, a vocal critic of big-tech who was confirmed by the US Senate earlier this month at a time when there is a growing bipartisan consensus on Capitol Hill on the need to rein in the American technology majors.

First published on: 29-06-2021 at 03:21:36 pm
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