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Monday, June 28, 2021

Judge Throws Out State and Federal Cases Against Facebook

Judge Throws Out State and Federal Cases Against Facebook

The judge, James E. Boasberg, said that the Federal Trade Commission’s complaint lacked facts, and that the agency needed to refile it within 30 days.

Facebook’s headquarters in Menlo Park, Calif.
Jim Wilson/The New York Times

WASHINGTON — In a stunning setback to regulators’ efforts to break up Facebook, a federal judge on Monday threw out antitrust lawsuits brought against the company by the Federal Trade Commission and more than 40 states.

The judge, James E. Boasberg for the U.S. District Court for the District of Columbia, said the case from the states needed to be dismissed because too much time had elapsed since the alleged offenses took place. The states, led by Letitia James, the New York attorney general, accused Facebook in December of buying up nascent competitors like Instagram and WhatsApp — deals made in 2012 and 2014 — to cement its monopoly over social networking.

In a separate, 53-page opinion, he said the complaint by the Federal Trade Commission, also filed in December, failed to provide enough facts to back its claims that Facebook had a monopoly over personal social networking.

The judge said that the F.T.C. had 30 days to refile its complaint.

“This really stings,” said William E. Kovacich, a former chairman of the agency. “This is a reminder to those who have wanted a dramatic, sweeping litigation campaign to take on Big Tech that there’s nothing easy about it, because the courts have a different view of the antitrust system.”

Representatives for the F.T.C. and the New York attorney general did not immediately have comments.

Christopher Sgro, a spokesman for Facebook, said: “We are pleased that today’s decisions recognize the defects in the government complaints filed against Facebook. We compete fairly every day to earn people’s time and attention and will continue to deliver great products for the people and businesses that use our services.”

The news pushed Facebook’s stock up 4.2 percent, and the company passed $1 trillion in market capitalization, a first for the social network and one of only half a dozen companies to reach such a valuation.

The decision was a major blow to bipartisan attempts in Washington to rein in Big Tech. President Biden has installed critics of the technology giants in key regulatory roles, including Lina Khan as chair of the F.T.C., and he is expected to issue broad mandates this week for federal agencies to address corporate concentration across the economy. Ms. Khan’s first major task as chair will be to rewrite the lawsuit to address the judge’s criticisms.

In Congress, legislators pointed to the decisions as proof that century-old antitrust laws needed updating for the internet sector. Courts have narrowed interpretations of antitrust laws over the years, making government cases difficult to win. Last week, the House Judiciary Committee advanced six bills that would overhaul antitrust laws, with the goal of loosening the grips that Amazon, Apple, Facebook and Google have over wide swaths of the economy.

“Today’s development in the F.T.C.’s case against Facebook shows that antitrust reform is urgently needed,” said Representative Ken Buck, a Republican from Colorado and a co-sponsor of the antitrust bills. “Congress needs to provide additional tools and resources to our antitrust enforcers to go after Big Tech companies engaging in anticompetitive conduct.”

Republican Senator Josh Hawley of Missouri, a critic of Big Tech, said on Twitterthat the court had acknowledged Facebook’s “massive market power but essentially shrugged its shoulders.”

The decision was also a disappointment for the growing cohort of activists who have pushed regulators to move to break up the biggest tech companies. Sarah Miller, the executive director of the antitrust think tank the American Economic Liberties Project, said she hoped the states would appeal the dismissal and the F.T.C. would file its case again. But she said the judge’s ruling underscored the need for Congress to update the laws that police market concentration.

“The courts are going to need, ideally, some congressional guidance here, given that they have some outsized role in determining the outcomes of antitrust cases,” she said. “Sometimes losses can be good because it can just reinforce that necessity, and we’re hoping that this will serve to do that.”

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