Judge: Facebook Not a Monopoly; Stock Skyrockets

John Lister's picture

A judge has thrown out two complaints from federal and state government that claimed Facebook broke competition laws. After the ruling, Facebook's market value rose to more than a trillion dollars.

The first case was brought by the Federal Trade Commission (FTC), which said Facebook not only had a monopoly but had unfairly maintained it.

The FTC said the monopoly was in the market of "personal social networking services" and that it's unfair actions included using technology to block interoperability between Facebook and other services. (Source: courtlistener.com)

Instagram Buyout Questioned

Meanwhile the attorneys general of 45 states mirrored the accusation of the Facebook monopoly and argued it had acted unfairly by buying out photo posting service Instagram and messaging tool WhatsApp.

Both suits called for courts to order Facebook to pay damages, cease anti-competitive behavior and undergo "divestiture or reconstruction of businesses": in other words to be forced to sell off parts of its operations.

As a general principle of antitrust laws, those bringing a case need to show a company not only holds a dominant position in a market but has acted unfairly to maintain or exploit that dominance.

Market Share Unclear

Federal Judge James Boasberg said the FTC had failed to prove the monopoly position. He took the unusual step of dismissing the complaints while keeping the case open. That leaves it open to them rewriting the case to give more evidence. (Source: bbc.co.uk)

According to Boasberg, the FTC had simply argued that Facebook's market share was "more than 60 percent" but hadn't given enough detail on how it defined the market or what it used the measure market share. He noted the issue was made complex because social networking services are free to use, so there's no way to compare revenue from sales.

Boasberg also noted that there's nothing inherently illegal about blocking interoperability with rival technologies. He did say a court could examine the Instagram and Whats App purchases, though this wasn't a signal either way on how it might find.

What's Your Opinion?

Do you think Facebook has an unfair monopoly? Is it possible to define market share in social networking? Does Facebook's dominance harm consumers and if so, should regulators use competition law to prevent this harm?

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eric's picture

We are in desperate need of legislative and judicial personnel who actually understand tech.
This case is another prime example (like the absolute circus of Epic v Apple) of government ineptitude in technology matters. The FTC, and the states who joined the lawsuit, clearly understand that FB is an anticompetitive monopoly. But both the plaintiff filing and the subsequent judicial decisions make it clear that neither party understands enough about what they're dealing with to be competent in the matter.
This common governmental lack of tech understanding is growing proportionately to the rate that tech is evolving.
Something has to change. We need legislators, judicial staff, and agency staff to be knowledgeable and competent in matters of technology.
While the FTC was once at the forefront of technology matters, those days are long past.

There needs to be a serious push for recruitment of tech competent people in government agencies and federal judicial staff. Until this happens, companies like FB and Google are going to continue to get away with running roughshod over our rights and any potentially competitive startups.